Category: Aerospace

Abstract

Companies often come up with different strategies that aim at helping them gain access and successfully manage their operations in overseas markets. Diverse entry modes are often chosen by firms.

The choice of entry strategies is often dependent on the local business culture of the company, as well as the nature of the operational environment that prevails in the international market.

This paper has explored the global strategy of managing business internationally as has been implemented by the Gulfstream Aerospace Corporation in its practice of expanding its operations overseas.

The findings from the research that has been conducted in the paper indicate that expanding business through partnerships and mergers is mostly utilized by Gulfstream.

The rate of adaptability to the foreign business environment ranges with the proactive strategies that help a company to quickly learn how to discharge managerial practices in a foreign business culture.

Overview of the Gulfstream Aerospace Corporation

According to GAC (n.d.), the Gulfstream Aerospace Corporation is one of the most renowned companies in the global aviation industry. The company has been in operation since the late 1950s. However, the real operations of the company were launched in 1978.

The company operates as a subsidiary firm of the General Dynamics Company. The company deals in the design, manufacture, distribution, and servicing of aircraft. The company is known for its specialization in the production and marketing of business-jet aircraft.

The company is said to have produced over 2,000 aircraft Since it began its operations. It should be noted that the company designs and manufactures different aircraft models, making it one of the most competitive companies in the business segment globally (Gufstream Website 2013).

The company has managed to manufacture and distribute different aircraft models. The aircraft models that make the company to come out as a world standard in the global aviation industry include G650, G150, G280, and the G550.

The ability of the company to sustain its operations in the global aviation industry is associated with investment in research and development. Research and development helps the company to come up with safe and reliable aircrafts that meet demand across different countries (Gulfstream, 2013).

Leadership and management philosophies in Gulfstream

The nature of leadership in a company is critical to the structuring and efficiency of operations in the company. Being a technological company, Gulfstream highly embraces quality. The management of quality in the company is termed as one of the key pillars of competition for the company.

Therefore, the management of the company focuses on outsourcing and development of a highly skilled labor team to manage technical operations in the company. In the management of its projects, the company’s management ensures that the codes of performance are highly fulfilled.

This is done in all projects of the company. Some of the codes that are critical to the attainment of quality in the company’s operations include the ‘Safety Management Diagnostic and the Safety Culture Organizational Review Evaluation’.

These codes of management ensure a high level of the minimization of flaws in the projects of the company, which in turn gives the company a competitive edge in the aircraft industry (GAC, n.d.).

Organizational design and marketing strategies

The Gulfstresm Corporation embraces flexibility in its management structures.

The company runs operations in different parts of the world. In order to attain market penetration in new operational regions across the globe, the company has sets operational centers in those regions in order to help it acquaint with the new markets.

The regional operational centers work in liaison with the main operational center of the company that is situated in the United States. The company’s marketing strategies are highly organized along international strategies of marketing.

The move to capture the international opportunities in the industry necessitates the time to time restructuring of the practices of the company (Brendan, 2005).

International business presents business opportunities for a company. However, a company must be in a position to meet the expectations of the customers in the international business environment in order to realize the benefits that accrue from the international business opportunities.

Expansion of the business landscape in China denotes a lot of travel by people into and out of the country. The Chinese private jet market is projected to attain a growth rate of 15.6 percent for 9 years.

The projection was made in the year 2009, following the signing of a business partnership agreement between the Gulfstream Aerospace Corporation and the Deer Jet Company Limited.

The partnership agreement between the two companies was signed in order to enhance the ability of the Deer Jet Company to manage the growing number of aircrafts procured from the Gulfstream Aerospace Corporation.

Under this agreement, Gulfstream is required to expand its support network in China through the deployment of its technicians in the country in order to aid in enhancing the required supportive infrastructure for the operation of the aircraft.

This provides grounds for the company to understand the Chinese business environment (Mayle 2010). This implies potential business operations for the company in China.

With a lot of indicators pointing to the fact that Gulfstream is expanding its market to China, it is critical to note the model through which the company is utilizing to penetrate the seemingly competitive Chinese market (Brendan, 2005).

As part of the marketing initiative to easily penetrate the Chinese market, Gulfstream utilized third party aircraft companies that are familiar with the Chinese business environment.

While the ability of the company to deliver aircraft cannot be doubted, the entry model into the Chinese market remains to be a critical issue. The company is reported to have sold the G200 aircraft to Sky Jet in the year 2005.

The planes were further purchased by Business Aviation Asia, which is a Hong Kong based company that has extensive business operations in the Asian region, including China (Brendan, 2005).

Human resource management policies

Human resource management practices are critical to the operations of a company since they determine the level of efficiency in the delivery of services to customers. According to GAC (n.d.), Gulfstream has approximately ten thousand employees who work across its operational centers.

The human resource management system of the company is efficient and captures the needs of the employees, who are located in the different operational locations in the USA, United Kingdom, Mexico, and recently the new operational regions in other countries like China.

The company employs people with a high level of skills. Moreover it embraces training, which helps the recruited employees to familiarize with the operational functions of the company.

The other notable HR practice in the company is the deployment of foreign staffs who help the company to comprehend the international management environment.

Leslie and Luis (1999) observed that the international business culture entails a set of business attributes such as business policies, practices and the business setting in the foreign market. This can be understood better by exploring their model of management in the appendices.

The complexity of managing business across international borders is compounded by the fact that firms are forced to learn to manage the culture in a foreign business environment.

According to Teagarden (2010), a firm can hardly access a foreign market without comprehension of the differences in business culture. Ethical issues vary in diverse markets, and so is the embrace of foreign operational cultures in Gulfstream’s foreign operations.

The main goal of the company, which also serves as its competitive edge, is the embrace of quality in technology. Therefore, the organization of human resource practices is also founded on quality. Apart from the normal routine operations, the operations of the company are deeply founded in organizational projects.

Where the staffs of the company cannot deliver on a given project, the company outsources project development teams from benchmark organizations, who help in accomplishing the company’s projects (GAC, n.d.).

Harrison and Bach (2005) ascertained that the company has not experienced any main labor dispute since the beginning of its operations. What is often experienced in the company are the small-scale labor disputes.

During the year 2002, the company’s management adopted a Dispute Resolution Process as a tool for resolving employee-drawn disputes. The Dispute Resolution Process is structured in such a way that it captures and resolves disputes of different dimensions. The process is organized in four levels, which include:

1. Human resource review
2. Management panel review
3. Mediation and
4. Arbitration

The employees are allowed to launch complaints of any labor misdeeds in the company, which are then determined through the dispute resolution process.

Basing on the labor code in each country, there are specific restrictions on the nature of complaints that can be raised and resolved through the dispute resolution process of the company.

Gulfstream ensures that the dispute resolution process does not tamper with the Federal Labor Act, which is the chief legal foundation on which all labor dispute resolution requirements are based.

The main labor dispute in the company was launched in the year 2003, where a total of 200 employees of the company claimed that they had not been remunerated, in spite of having worked overtime (Harrison & Bach 2005).

Strategies on global operation

The growth of the Gulfstream Corporation and its subsequent spread of its business operations in other regions of the world like Europe and Asia are likened to the business expansion strategies that were utilized by the company in the course of its growth.

Notable among the strategies is mergers and acquisitions as a way of strengthening operations and adapting to diverse business cultures across different regions. There have been a lot of developments in the Gulfstream Corporation since its acquisition of the General Dynamics.

The developments often revolve around the adoption of technology and expansion-oriented strategies. As of today, the aircrafts of the company are used in over forty countries across the globe.

The company is projected to gain a solid operational ground in different regions of the world through its continued investment in business expansion programs (Gufstream Website, 2013).

One area that has been the center of the expansion strategies for the company has been to monitor competition in the foreign environment. There are a wide number of aviation companies that are coming up in the Asian region.

While these companies do not pose a direct threat to Gulfstream because of its entry model into the region, this poses a lot of indirect threats to the company. It should be noted that entry through third parties prevents the company from gaining direct exposure into the Chinese market.

This means that the company can easily be eliminated from the market in case the Asian companies advance their operations and abilities to produce and operate aircraft. The prohibition of private companies to register and operate their aircrafts in China has helped to sustain Gulfstream operations in China.

However, the partnership of its third parties like Business Aviation Asia with other companies in the region poses a major threat to future operations of the company in China and the entire Asian region (Brendan, 2005).

In its bid to gain a stronger footing in global operations in other regions of the globe, especially Europe and Asia, the company faces a lot of constraints in establishing the operational centers in these regions. The problem ranges from cost to the culture and adaptability of the new operational environment in these regions.

The centers are critical to the regional operations of the company, including attending to the concerns that are raised by private customers in these foreign markets.

While the local companies find it easy to address the needs of their customers, it is quite daunting for Gulfstream to understand and respond to the demand of the customers.

However, it is quite easy to effectively attend to the needs of the customers with the setting up of the local operational centers in the new operational regions, for instance the Gulfstream Lutton factory service center in Europe.

The local companies that partner with Gulfstream also help the company to understand and deal with the demands of the customers in the foreign markets (Mayle, 2010).

While entry into markets by partnerships helps the company to easily adapt to the foreign business culture, it can be disadvantageous to the company in cases where such partnerships are terminated by the foreign firms.

The entry through establishment of subsidiaries is not highly embraced by Gulfstream, yet it can be critical in the advancement of international HR strategies of the company (Adams Media Inc., 2009).

Conclusion

This paper has explored the management strategies in the Gulfstream Aerospace Corporation. The Gulfstream Aerospace Corporation is an international company that deals in the manufacture, distribution, marketing and repair of aircraft, specifically jets.

In the paper, it has come out that the company is proactive in terms of devise and implementation of managerial strategies that helps it thrive in the international market. It has also come out that the company has been investing in the development of strategies to help it access foreign markets.

With a management philosophy that embraces quality in design and operation, combined with the ability of the company to integrate local and international human resource strategies, the company is likely to remain competitive in the industry.

Appendices

Appendix 1

Figure 1: Impact of cultural influences on the efficiency of firms in the international business environment.

Source: Leslie & Luis (1999).

References

Adams Media Inc. (2009). The National jobbank 2010. Avon, MA: Adams Media.

Brendan, S. (2005). Gulfstreams head to China start-up. Web.

GAC. (n.d.). SMS delivery and implementation part 145-Gulfstream Aerospace Corp – USA. Web.

Gufstream Website. (2013). The history of Gulfstream: 1958 – 2011. Web.

Gulfstream (2013). Complete Aircraft Maintenance Support & Airworthiness Management (CAMO). Web.

Harrison, B. S & Bach, T. L. (2005). The eleventh circuit upholds a broad arbitration agreement. Bender’s Labor & Employment Bulletin. Web.

Leslie, P. E & Luis, G. R. (1999). A theory of global strategy and firm efficiencies: considering the effects of cultural diversity. Journal of Management, 25(4), 587-606.

Mayle, M. C. (2010). Gulfstream executive: Business aviation shifting, going global. Savannah Morning News [Savannah, Ga] 16 May 2010. Web.

Mayle, M. C. (2010). Gulfstream signs pact with China’s Deer Jet: Agreement represents growing Gulfstream commitment to its Asian operators. Tribune Business News. Web.

Teagarden, M. B. (2010). Resolving global management implementation challenges, Thunderbird International Business Review, 52(6), 461-463.

Introduction

Bombardier aerospace is a division of Bombardier Incorporation that deals with the production of aircrafts. In the past, the company has been among the leaders in production of business jets as well as regional aircrafts. Nevertheless, there has been dynamics in the customer tastes and preferences thus requiring rather customized aircrafts.

On the same note, the issue of global warming has brought about new dimensions in the requirements of aircrafts. Moreover, there has been increased competition among aircraft manufacturers each seeking to offer the most comfortable aircraft at the lowest cost. The Bombardier case study focuses at the case of Bombardier aerospace and how the company deals with the challenges in the aircraft industry.

Analysis of the Industry

The aircraft industry is a very competitive industry with each player aiming at maximizing its revenues and profit margins. Planning in advance after taking into consideration the changing tastes and preferences, is critical. This is the reason why Bombardier plans to introduce new aircrafts into the market. The Cseries generation of aircrafts is not only aimed at enhancing market share, but also at offering better services than its competitors.

Nevertheless, the market is highly unpredictable and certain unprecedented issues can lead to far reaching effects in the industry hindering individual plans. The September 11^th terrorist attack for example highly reduced demand of flights as well as demand of aircrafts. Moreover, disease outbreak in one region can cause a sharp decline in demand all over the world.

The company has seen substantial growth over the years with its production increasing tremendously. It can be shown that since 1974 to 2006 the average production has been increasing despite the fact that there are some years when production actually declined. Demand of aircrafts is projected to grow up to year 2025.

It is important to note that due to the introduction of the hubs-and-spokes routes network means that the demand for small aircrafts with the capacity of between 80 and 120 will increase sharply. This is an opportunity for Bombardier to increase its market share given that this directly increases demand of its products since it majorly specializes in the production of this aircrafts.

On the same note, contribution of Bombardier aerospace to bombardier Inc. is quite significant and remains high compared to the other division. Moreover, total revenue of Bombardier aerospace has been increasing on average over the years despite small variations. Cost is a crucial factor in the manufacturing of aircrafts given the fact that each airline company wants an aircraft that is cheaper to maintain and fuel.

Nevertheless, comfort is also vital and balancing between the two aspects in a single aircraft has been a challenge. To solve the problem, Bombardier produces two types of aircraft: CRJ which has a turbo-reaction engine thus fuel –efficient and comfortable, and the Q-series which has a turbo-propulsion engine thus requiring less maintenance costs. Another challenge of Bombardier is the frequent change in management especially since 1992.

The frequent changes are highly likely to affect implementation of organizational strategy since each person could be having different policies. It is crucial to note that, consistence is vital for the success of any organization. The firm operates in an industry that requires heavy initial capital investments for a new entrant. To a certain extent this has been a hindrance to new firms that would have liked to venture into the market.

Nevertheless, there have been moves by several countries to enter the market. The main reasons behind these moves have been noted as being national interests as well as the high potential in the industry. Some of these countries include China, Japan and Russia.

This is a threat to Bombardier given that firms in some of these countries are the main parts suppliers of Bombardier and therefore some vital information regarding the industry and plans of the company. Moreover, the problem is escalated by the fact that global demand is shifting towards BRIC countries at a very high rate. The main strategic objective of the company is to become a global leader in the manufacturing of aircrafts and everything possible is done to achieve this.

The announcement that the company was planning to introduce new and arguably more efficient Cseries aircrafts is a move towards ensuring that the firm maintains its leadership in aircraft manufacturing. Nevertheless, one cannot be confident because there is a possibility that other firms in the industry are silently planning their moves. In this industry it is not possible to monitor the moves of a rival.

Main Problem Facing Bombardier

As any other player in the industry, Bombardier recycles the technology it uses in production of its aircrafts. Most of the technology in production has remained the same over the years with slight modifications. This has brought the dilemma of the Cseries with skeptics saying that the aircrafts will be just like the old ones. In the aircraft industry, recycling of aircrafts and technology used to manufacture the aircrafts is the order of the day

Despite the increasingly changing customer demands as regards tastes and preferences, Bombardier has shown little or no efforts in coming up with new technology in manufacturing of aircrafts. The same old technology is just modified a bit and a new aircraft is released to the market. Nevertheless, there is increasing technological discoveries in various sectors of the economy including the aircraft industry.

For efficiency to be attained in any given scenario, cutting age technology is crucial. Investment in research and development is therefore an important part of any organization in this age of globalization. However, though a lot of money is injected into research and development in Bombardier Aerospace, there is no new technology that has been developed for a very long time.

It is crucial, however, to note that the outsourcing of some services like Bombardier does is one move to ensure that new technologies are integrated into production of commodities. Nonetheless, not all services are outsourced and not all outsources services are delivered at the latest technology.

Therefore, it is upon any company to ensure that its research and development department comes up with new improved technologies. For the case of Bombardier, critics have learnt that the firm uses its old technology and this is not good for the business. Rivals can take that opportunity and increase their competition. This is a serious threat that management needs to emphasize on.

Strategic Alignment

Each organization aims at enhancing it strategy so as to take full advantage of the market. However, for any strategy to succeed there should be commitment from each stakeholder and especially employees. On the same note, the strategy should take into consideration the external and internal environment in which the country is operating.

As a result any firm will need to align its structures and its strategy to the prevailing external environment. This process is referred to as strategic alignment and it is crucial in ensuring that a firm’s performance is improved. It should be noted that understanding the goals and visions of an organization is the first and arguably most crucial stage in accomplishment of the goals.

It has been noted that people will work better when they understand and appreciate the goals of their company. Similarly, knowing what impact one’s individual efforts make to the general organization will increase the willingness of one to work hard. The main strategic objective of Bombardier is to become a global leader in the production of small aircrafts.

As a result, each and every structure should be aimed at enhancing this objective. Therefore, the announcement of a new and more efficient Cseries aircrafts is a very good move at achieving this objective. The company has taken the move ahead of other market players which is crucial for any market leader.

Without strategic alignment, the probability of loosing focus of the main goals of the business is high. Strategic alignment ensures that there is connection between individual and corporate goals so that each person and structure is committed towards success of the firm.

Given the competition that exists in the aircraft industry, a firm cannot afford to assume strategic alignment. Each firm is aiming to beat its competitors and increase its market share. As a result, it is upon each firm to take the lead if it has to gain.

Different Decision Making Methods

There are different strategic decision making ways that are used in any organization. Among the major ways is the group decision making method. Bombardier had a group of people that were involved in overseeing the process of Cseries production. Even after the project was halted for a period of time still there were 50 people left with that task.

Group decision making has various advantages which include objectivity as individual feelings will be eliminated. Moreover, the possibility of diversity in information in a group ensures that decisions made by a group are of high quality. However, this method also has various disadvantages which include increased time before the group can reach a consensus regarding something.

Moreover, there is a possibility of some people fearing to express their minds in the fear of being the only ones against the group. Another strategic decision making method is Participative decision-making where all employees are allowed to contribute to the decision making process. This method is crucial because it creates a sense of belonging among employees which increases their morale and hence output.

Moreover, this enhances teamwork in an organization and commitment of employees towards organizational success. The main drawback of this method is that it is sometimes difficult to clearly know the motive of management to include employees in the decision making process. Moreover, it takes a lot of time to collect the contributions of every stakeholder before making a decision and this cannot be used in critical situations.

Trivial but Crucial Decisions

There are several decisions made by Bombardier that seem to be trivial from the outset but which have far reaching effects on the firm. Choose for example the decision to announce that the firm is planning to bring into the market a new generation of aircrafts named the Cseries. After some period of time the management of Bombardier announces that it has halted its plan citing that the time is not the right one.

This may seem as a very casual announcement but it has complicated effects. To begin with, the announcement can make competitors aware of the moves that are likely to be taken by the firm as well as the time frame. Competitors can use this to shock the company by moving faster and producing equivalent aircrafts.

Moreover, halting the process may send the wrong information that the firm has not been able to come up exactly with what it wanted or that there are some internal problems that hinder success of the project. As depicted, already critics have pointed out lack of technological improvement as a possible cause for the delay. This decision can impact on the firm to the extent of compelling the firm to redesign its strategy.

Challenges in Developing Aircrafts

Aircraft production is very complicated. Firstly, aircrafts are made up of very many parts which require different level of expertise. However, it is very difficult to have all the required technology in one firm and this call for outsourcing. Nonetheless, one has little control over the outsourced services and this increases production time.

On the same note, aircraft production is a very expensive exercise that requires heavy capital investment and this can be a problem to acquire. Furthermore, there is a lot of competition in aircraft production and some countries support their own manufacturing firms. This leads to unfair competition that affects players in the industry.

Strategies Used by Bombardier

Bombardier applies different strategies at different levels of its business. At the corporate level, Bombardier applies global strategy because the demand for aircrafts is more or less global. Cultural beliefs do not have much impact in the aircraft industry while customer taste and preferences are rather universal. Consequently, the company can afford to use one strategy for every country to which it supplies aircrafts.

This can be depicted by the fact that the firm has centralized manufacturing units. This strategy is crucial in the aircraft industry since it allows a firm to benefit from economies of scale. However, on the business level the firm uses integrated differentiation and cost leadership approach. This is depicted from the fact that bombardier aims at producing aircrafts that are fuel efficient and cheaper to maintain.

On the same note, Bombardier has differentiated its products into two major categories so as to take care of the diversity in demand. This approach is crucial as it ensures that the firm is able to take advantage of any opportunity that comes along. It is important to note that not all people really care about cost. There are some people to whom comfort is crucial than cost. The integrated approach enables the firm to diversify its aircrafts.

Recommendations

Technology is the driving force in the world nowadays given the current wave of globalization. Therefore, it would be crucial for Bombardier Aerospace to ensure that it comes up with new technologies in the production of aircrafts. This will increase consumer confidence and therefore increase its demand. On the same note, stability in management is crucial for the success of the firm. Consequently, there is need to decrease the frequency with which top management is changed.

Current Size

The aerospace industry mainly comprises civil and military aircraft which have become part and parcel of modern-day life. It is estimated that the global aerospace industry is worth US$ 700 billion. This comprises the sectors of commercial aerospace, defense, space, and general aviation The United State of America is estimated to have spent US$253 billion in the year 2008 alone in military investments.

The commercial aviation industry involves a considerable amount of money and is dominated by Boeing–Airbus duopoly. The status is, however, changing as other foreign companies are entering the market which is estimated to be worth an excess of $200 billion. The number is still expected to rise at a rate of 3.5% over the next 15 years. Most airlines now prefer to replace their old aircraft with new ones, as opposed to maintenance, repair, and overhaul (MRO). In the year 2011, US airlines replaced their fleets with a preference for Airbus. The orders made by the company reached a record of 1750 aircraft. (Electronic Subscription Service, 2005)

On a local level, the industry giant Boeing announced its plan to move out of Wichita, Kansas City, citing increased operational costs. With the aerospace industry generating revenues to the tune of US$ 2.1 billion, this move will lead to unemployment for more than 2000 employees working for the company and loss in revenue (Carlos, 2012).

Growth Potential

The global aerospace industry had several years of sustained growth even after the global economic crunch of 2008. In spite of a number of factors undermining the overall global economy, the industry showed considerable strength in the same year. Total sales of aerospace products and parts were 15.5 billion, an increase of 3.5% over 2007, according to the U.S. Bureau of Census.

The defense industry has adapted new and different business models in a bid to meet the industry’s requirements. There have been concerns about the energy requirements and the need for data capture which has ultimately led to new market opportunities for this sector. However, underinvestment from the Department of Defense in R and D may lead to a situation where the industry will lack the facilities to come up with new technologies and products.

Industry Trends

As mentioned above, the U.S airlines began replacing their fleet in 2011. This is because the current trend in the aerospace industry is to cut down costs on fuel. Fuel accounts for about one-third of operational costs, and considering a 12% increase in oil prices translates to 0.4% point reduction in global economic growth, it was probably the best decision (Electronic Subscription Service, 2005). Technological advancements have given the aerospace industry opportunity to grow beyond expectations.

The national security spacecraft, for instance, wished to have the ability to be able to launch on-demand. In response, the Department Of Defense and the commercial industry are currently working together to come up with a set of guidelines intended to ensure operationally responsive launches. The telecommunications sector encouraged further growth in the aerospace industries as more satellites needed to be launched into space.

However, the late 1990s downturn saw an overproduction of the equipment which led to reduced launch prices. The ease with which components can be bought from the internet has increased sales within the aerospace industry. However, this also promotes the purchase and production of counterfeit parts as it is very difficult to verify the authenticity of a product online. In this case, the internet undermines the integrity of the whole program and can even have disastrous effects if the components are used in commercial and military aircraft.

Other Characteristics

There are several factors that influence the aerospace industry including, but not limited to, counterfeit parts or components, regulatory compliance, and human resources. Counterfeits: For many production companies within and without the aerospace industry, counterfeit goods are a major financial setback. The decision by some original equipment manufacturers (OEM) to do away with some components saw the rise in counterfeit goods to seal the very large gap left.

Users are forced to get a replacement for parts from the counterfeit market. Regulatory compliance: Major players in the industry are forced to adhere to the strict rules which in turn slow down production and increases operational costs. This is in an effort to promote sustainable development. Human resources: In an era where companies are forced to lay off workers in a bid to reduce operational costs, it becomes increasingly difficult to ensure the growth of the industry.

Taking into account the fact that professionals in this industry are highly educated and require good salaries, companies are faced with the dilemma of maintaining a balance between workforce and profit-making.

The aerospace industry is a multibillion-dollar sector with after-tax profits of about $15.5 billion. This is even after a decline of 16.5% over the year 2007 (Carlos, 2012). Wichita, in Kansas City, is the region within the U.S. where the aerospace industry is most active. This is the home of Boeing, the aerospace industry titan.

Distribution Channels

The main distribution channel for the aerospace hardware industry is the internet. The latest parts and components are advertised online and potential buyers use catalogs to order for their preferred products and pay using their credit cards. Buyers can also go through directories that list all manufacturers and suppliers of aerospace hardware.

References

Carlos Gomes (2012). “Aerospace”, Industry trends-aerospace. Web.

Electronic Subscription Service (2005). Aerospace Dynamics. Web.

Executive Summary

Training is an essential component of the organization’s efficiency. When arranged in a timely and effective manner, it maintains an appropriate level of proficiency, enhances employee satisfaction, and, ultimately, increases competitive advantage of the organization. However, the process is expensive and resource-demanding. Therefore, it is necessary to establish its effectiveness and, if possible determine its benefit to cost ratio.

The following report provides evidence of the contribution of the training program at Global Aerospace Logistics, LLC (GAL) on job performance of its technicians, offers recommendations on the benefit to cost ratio of the program, and outlines the bottom line benefits provided by the program for organization’s competitiveness. The data for the research is collected through self-administered surveys and interviews. Both qualitative and quantitative analyses are used to obtain reliable results and gain in-depth understanding of the matter.

The findings suggest the overall positive effect of the program, both from the employees’ and managers’ perspective and suggest several approaches to calculating benefit to cost ratio. In addition, several barriers are identified to the effective use of obtained skills as well as the assessment of financial data, with the recommendation regarding their mitigation.

Introduction

Employee training is a crucial component of a successful organization. Professional knowledge plays an important role in the ability of the staff to perform effectively and according to their workplace responsibilities. At the organizational level, this can be viewed as an important source of competitive advantage in the market. However, despite significant emphasis on obtaining the qualified workforce, maintaining a desired level of proficiency is a challenging task in the highly dynamic organizational environment. The pace of the technological advancements that permeate the modern corporate domain makes the described task a practical impossibility and require the introduction of a mechanism that would allow for timely updates of the state of employee knowledge. Thus, training becomes an absolute necessity for the organizations that aim at retaining their leading positions in the market.

Due to the fact that the process of training was determined to have a profound effect on the performance of the organization, it became clear that a certain level of control is necessary to estimate the performance and ensure the consistency of the results. However, upon closer inspection, it became clear that the process of training evaluation requires a specific, well-defined approach in order to produce valid findings. Thus, several methods of training assessment have been put forward by the scholars and adopted by the organizations.

Rationale

The evaluation of the efficiency of employee training is important for several reasons. First, the process of training requires significant resource and time allocation. At this point, it is important to emphasize that the expenses created by such allocation are not to be perceived as losses – in fact, it would be more appropriate to view them as an investment in the organization’s performance. However, in order to estimate the viability of such investment, it is important to assess the outcomes of the training process and model the probable changes in organizational performance resulting from them. In other words, the evaluation process provides the organization’s management with the understanding of the effects of a training program.

By extension, it is possible to expect that the results of the evaluation can be incorporated in the strategic planning process since they offer an insight into the possible changes in performance. Second, the assessment allows for a more comprehensive understanding of the effects of a training program, namely the individual perception of its effects on participants. Specifically, the assessment may reveal the increase in self-esteem, motivation, and engagement of employees.

In some instances, these perceived benefits will have a significant effect on the productivity and efficiency of the organization as a whole. Third, the training assessment process is an important component of the evaluation of a workplace culture in the company. A consistent quality improvement is essential for achieving the desired level of performance and sustaining the competitive advantage without the constant inflow of resources. Thus, it should be viewed as an encompassing aspect of quality control tool that offers a range of opportunities at the macro level.

Purpose of the Study

The current study aims at providing a better understanding of the impact of employee training on the performance of the organization. Specifically, it intends to establish the relationship between the training delivered to the workers and a respective change in their professional performance. Next, the study is expected to outline the benefits of employee training and development expressed in several specific measurements, such as employee satisfaction level, employee retention, product quality, and the efficiency of the organization. Finally, it is expected that certain insights are gained regarding the calculation of the benefit to cost ratio of the conducted training. Overall, the results of the study are expected to provide useful data that can be utilized in the strategic planning process.

Literature Review

The issue of employee training assessment is a persistent issue in the industry. Despite the fact that it has been recognized as an important component in the evaluation of the organizational performance, the concept is still lacking in operational definitions and does not have an established and agreed upon framework that could be used universally. According to Brauchle and Schmidt (2004), the productivity of a training exercise is often measured by administering a questionnaire or conducting a series of interviews intended to provide the desired information.

In some cases, the consistency between the needs of the organization and the topics covered by the program are considered a sufficient confirmation of the program’s success (Brauchle & Schmidt 2004). Such an approach s clearly oversimplified and probably overlooks numerous aspects that need to be taken into account. The most relevant aspect that is not covered in such a process is the monetary value of the training expressed in the benefits derived from the improved proficiency of the workers.

The monetary component has two advantages. First, unlike the perceived value that is commonly used as a basis for assessment in the majority of questionnaires, the monetary value is universal and can be converted into a unified measure, such as a U.S. dollar. This allows for comparison of the achieved results with the outcomes reported in the academic literature. Second, the concept of financial gain associated with the increase of an intangible characteristic is attractive to managers and the administration of the organization and allows for an effective communication of the goals and benefits of the process (Brauchle & Schmidt 2004). It should be pointed out that in many instances, the inclusion of the metric is associated with significantly increased complexity.

Fletcher and Wind (2013) incorporate an example of simulation in medical training which requires the evaluation of several groups of equipment depending on a form of training: human actors for live simulation, virtual patients presented via software means, full-body manikins enhanced with electronic sensors, and simulations of specific body parts. As can be seen, the diversity of elements results in the increased complexity of the assessment.

At this point, it is important to understand that different aspects of organizational performance can be prioritized in accordance with their relative significance within the organization. For instance, Williams and Nafukho (2015) consider technical domain a more viable area for evaluation within the organization than any other functional area, mostly due to the high probability of error and the magnitude of consequences resulting from their occurrence.

The study also suggests that the majority of the organizations tend to perform the level 4 evaluation, which is considered of high degree of validity, but that only a fraction of companies utilizes the highest level of evaluation, likely due to technical difficulties and restrictions associated with its implementation (Williams & Nafukho 2015). In other words, while in the majority of instances the evaluation is performed with a sufficient degree of integrity, the complexity of evaluation poses a significant drawback for the stakeholders and thus undermines the overall quality of findings.

Arguably the most successful attempt at creating a consistent and accessible framework is the Kirkpatrick’s model. The model utilizes four levels of evaluation – reaction, learning, job performance, and organizational impact (Reio et al. 2017). The levels are positioned in a specific order that is determined by the scope of their influence on the organization. Consequently, each next level is more representative of the value of a training program under evaluation for the company.

However, it is also important to note that the complexity of the inquiry increases exponentially with each level and requires greater allocation of time and resources, which may discourage some companies from performing a complete examination. Nevertheless, according to the consensus, the increasing value of data from each stage mitigates the expenses associated with the process (Reio et al. 2017). Despite the success and widespread adoption, several weak points have been identified in the Kirkpatrick’s model, and respective adjustments have been proposed by the scholars in the field (Reio et al. 2017).

The most common criticism deals with the model’s focus on the outcome of the training process, with no account for the preceding factors. Several models were introduced in an attempt to address this drawback, including the context, input, process, and product (CIPP) model, the input, process, output (IPO) model, and context, input, reaction, and outcome (CIRO) model (Reio et al. 2017). All of the models above incorporate elements that occur during the training process and have a measureable effect on its result.

Finally, some experts suggest frameworks that prioritize certain elements intended to enhance the effectiveness of the evaluation process while at the same time diversify the potential areas of the evaluation’s implementation. Grohmann and Kauffeld (2013) emphasize the importance of psychometric parameters in the evaluation process and suggest a framework intended to comply with the psychometric standards. According to the authors, such an approach will provide more accurate results due to the reliance on psychometrically sound properties while at the same time increase the applicability of the assessment to different organizational setting (Grohmann & Kauffeld 2013).

It should be pointed out that such applicability would also provide the opportunity of comparing the results obtained in different training contexts, similar to the outcomes measured in monetary units. Barnett and Mattox (2010) stress the importance of a comprehensive plan for the assessment of training program’s efficiency and outline five essential components that need to be included in the plan in order to produce a conclusive and accurate result.

The components in question are resources, measurement models, strategy, cultural readiness, and measures (Barnett & Mattox 2010). According to the authors, the inclusion of these components will ensure the necessary degree of applicability of the assessment to both the large- and small-scale entities while at the same time decreasing the complexity of the evaluation process for the encompassing corporate environments (Barnett & Mattox 2010). Finally, such an approach is expected to be beneficial for the assessment of web-based and other technology-mediated programs.

As can be seen from the literature review, the majority of the sources display agreement on the importance of the employee training assessment. Another common theme is the apparent complexity of the programs, which poses a serious challenge for the companies that implement them. Finally, it is apparent that despite the popularity of some of the training programs, neither has been universally adopted. In fact, the complexity of assessment, especially at the organizational level, constitutes the most noticeable barrier to their adoption and prompts the managers to bypass them, focusing instead on the most simply measured, albeit the least representative, aspects of assessment.

Methodology Design

Research Questions

The available information about Global Aerospace Logistics highlights several needs that should be addressed by the research. These needs highlight the areas that need to be reflected in the research questions in order to be conclusively answered. In the broad terms, the inquiry focuses on the outcomes of training conducted within the company and aimed at determining its viability for the retention of a competitive advantage. The outcomes should be disaggregated by the area of influence and should thus include items such as job performance, product quality, employee retention, employee satisfaction, and benefit to cost ratio. Based on these considerations, the following research questions were suggested.

• RQ1: How the training received by the technicians contributed to their job performance?
• RQ2: How can the Maintenance Training Department calculate Benefit to Cost ratio for conducted training?
• RQ3: What are the bottom line benefits that employee training and development provides to the organization and its competitiveness?

At this point, it is necessary to specify that the third question involves a range of distinct variables that need to be addressed with a high degree of specificity in order to provide findings. The most significant variables include employee satisfaction levels, employee retention, product quality in terms of reworks and scraps, and overall efficiency of the organization.

Research Design

The research at hand utilizes a case study method. The decision was prompted by several important advantages pertinent to the method. First, the identified research design is based on a close examination of a single case or phenomenon in order to reach the conclusions. This aspect was particularly suitable for the case at hand since the scope of the study was limited to a specific company and its performance within a well-defined period.

It is also worth noting that the research questions identified in the previous section require a relatively diverse set of results, some of which can only be obtained via an in-depth inquiry into the matter, characteristic for case study design. Another notable reason is a geographic localization of the case, which is confined to the Al Bateen Airport. At this point, it should be mentioned that other approaches are equally applicable to the outlined setting, such as experimental or longitudinal designs.

Nevertheless, the idiographic approach chosen by the researcher contributes to the suitability of the identified method. It is also notable that the case involves a highly specific set of criteria, including a well-defined group of participants and location, which contributes to the ease of implementation of the chosen design.

Several alternative options were considered at the stage of methodology design. The most suitable approach aside from a case study, evaluation research, was considered viable due to its compatibility with the goals of the research, particularly the ability to determine whether the needs of the organization were met as a result of the intervention. However, it was eventually rejected as it required an in-depth inquiry into the initial situation to collect baseline data and, by extension, an extended time of research, which was unacceptable under the given conditions. Next, the experimental design was considered unsuitable, mainly due to the requirements posed by the approach.

Specifically, an experiment typically involves a set of sampling practices such as randomization and the introduction of a control group. These conditions could not be fulfilled to a satisfactory degree due to the preoccupation of the stakeholders at the Al Bateen Airport with their routine operations. For this reason, experimental design is a rare occurrence in the field of organizational behavior and management research. The cross-sectional design was rejected due to the necessity of including more than one group in the study, which was outside the scope of the study. It should also be mentioned that while the method in question provides relatively reliable results and requires less time to perform, it does not illustrate the sequence of events.

In simple terms, while it would outline the job performance following the intervention, the possibility of establishing a definitive causal relationship between the training and the observed outcome would be severely limited. Next, the longitudinal design was considered inappropriate since it typically requires at least two sets of data collected from the same sample within a sufficiently large time frame between them.

While such approach could provide the necessary data as well as establish the required causal relationship, it could not be performed within a timeframe of the research at hand. Finally, the comparative design would require more than one sample to arrive at a definitive conclusion. Considering the fact that the study focused on a single organization and no comparable sample could be identified, this method was rejected.

Operational Definitions

The formulated research questions contained several variables that had to be specified as operational definitions in order to increase the reliability of the findings. The most apparent variable is the concept of employee training, which can be defined as an educational or skill enhancement intervention provided to the staff by the management with the goal of addressing a specified gap in performance or increasing the overall proficiency.

The Benefit to Cost ratio required for one of the research questions is a metric that enhances the understanding of value of a selected intervention by identifying the expenses associated with the process and comparing them to the benefits derived from it. Next, the definitions of several dependent variables should be included. Specifically, employee satisfaction is a measurement of the perceived satisfaction with a condition or a set of conditions that is typically used as a component in workplace culture assessment process. Next, employee retention is a concept that describes the determination of the organization’s staff to remain employed by the company.

Retention is typically considered closely related to the employee satisfaction. Product quality is a set of characteristics pertinent to the product offered by the company that determines its suitability to the target audience. Quality is often considered one of the main determinants of the observed demand and, by extension, a source of competitive advantage, for which reason the control mechanisms are usually incorporated into the production process. Finally, the efficiency of the organization is determined by a combination of factors that collectively contribute to its capacity to perform under optimal conditions. The set of factors is determined individually for each organization.

Data Collection

Data Collection Approach

The data for the study was obtained directly from the involved stakeholders. The research incorporated both qualitative and quantitative data in order to address the research questions consistently. The quantitative approach produced measureable, quantifiable, and reliable data, which enhanced the applicability and utility of the results. Since the majority of data reflected the intangible concepts and values, it was converted into a numerical form using established data collection tools such as Likert scale.

Such approach allowed the research team to achieve the necessary level of compatibility of the data with the findings in the related areas, produce more universal results, and compare the outcomes with the findings of similar studies available in the academic literature. The quantitative method also provided the researchers with the possibility to express the findings in an unambiguous manner and with a high degree of accuracy.

In the case of Global Aerospace Logistics case, where several measurements were planned to be conducted, such approach was especially relevant as it allowed for the comparison between several datapoints once such necessity presented itself. In addition, several elements of the assessment process, such as benefit to cost ratio, employee retention, and product quality, could be more reliably established using quantifiable values. Thus, the quantitative approach was prioritized in the course of the analysis.

The qualitative approach, on the other hand, provided an in-depth insight into the issue under inspection. This approach was especially relevant for the GAL case since it provided an opportunity to reveal important details that could not be established via survey with close-ended questions. Another reason for the selection was the relatively low sample necessary for the data collection process. It should be mentioned that the process of interpreting the data obtained through interviews (the tool chosen for the qualitative analysis) typically requires significant time and effort. However, this disadvantage was partially mitigated by a relatively small expected sample size (approximately 5 respondents), which allowed for the inclusion of qualitative analysis in the study despite the restrictive time frame.

Participants

Due to the scope of the inquiry, the sample for the study included all technicians that participated in the training exercise. In other words, the entire involved population could be considered compliant with the inclusion criteria (in the case of GAL – the participation in the training exercise) and included in the sample. In other words, non-probability sampling was used for the study at hand. Since the research team has gathered the information only form the individuals that were known to be a part of the studied population, the technique in question was purposive sampling. The selected approach had two important advantages.

First, the population in question was relatively limited and thus did not allow for a meaningful randomization without decreasing the size of the sample below a reasonable threshold. Second, the focus on details and depth of the obtained information encouraged the inclusion of the entirety of the available information in order to reach the necessary coverage. Finally, it is worth mentioning that the exclusion of randomization allowed for additional optimization of the process by speeding up the collection process.

Reliability and Validity

Several practices were incorporated into the data collection process to make the outcomes more reliable. First, the data obtained by individual researchers was reviewed for consistency in order to determine the level of agreement between the researchers, thus establishing the inter-rater reliability. Second, the inter-item correlation was established in order to determine internal consistency. Finally, the stability of the statements obtained from the respondents was ensured by collecting data at different points in time and examining the datapoints for inconsistencies and deviations.

Both the survey and the interview were reviewed by the research team members. The identified potential drawbacks were discussed, and solutions for their minimization were incorporated. The benchmark tests were performed prior to the launch of the data collection process. In this way, face validity and concurrent validity of the data was established. The researchers also familiarized themselves with the findings of the similar studies in the field of quality management in order to establish construct validity of the data.

Analysis

The data collection process resulted in two datasets. The first set was based on the results of a close-ended survey that utilized Likert scale and was analyzed using the quantitative approach. The second set contained the findings of an interview and was coded in accordance with the qualitative methods used in case studies.

Quantitative Data

In order to perform a quantitative analysis of the results of the survey, it is first necessary to establish the nature of data represented by the responses. In the case of GAL, the questions were focused on the positive effects of the training sessions. The effects ranged from workplace productivity to the favorability of the environment to different aspects of employee satisfaction, such as tangible and intangible rewards. In all cases, the response “strongly agree,” situated as a first option, was considered the most favorable response and confirmed the positive impact of the training, whereas “strongly disagree” (situated in the end of the list) was associated with unfavorable outcome, either for the company or for the employees.

Based on this assertion, it is possible to incorporate at least two descriptors, mean and mode. The latter is the most straightforward in terms of calculations since it can be performed by relying on raw data or through the examination of bar charts generated from the responses. For example, the majority of responses to question one (9) agree with the notion that the knowledge received during training was applicable to their work. This suggests that the second option is the mode in this case. As can be seen in Figure 1, this response is the mode in the overwhelming majority of cases (16 out of 20), followed by the first and third option, each being the mode in one case. It is also worth noting that in two instances (question 10 and 15) two options receive an equal number of responses (first and second and second and third, respectively).

The mean would require an interpretation of response options into a quantifiable format. Considering the favorability criterion explained above, it would be reasonable to assign the values of 5 to 1 to the options from “strongly agree” to “strongly disagree.” With this assertion on hand, it becomes possible to calculate the mean of each set of responses, with a higher resulting number representing greater favorability of training session outcomes.

For example, the mean for question one will be calculated as follows: (8 * 5) + (9 * 4) + (1 * 3) + (2 * 2) + (0* 1) / 20 = 4.15. In this case, the value of 4.15 indicates that the number of negative responses is negligible since the average response is above the second most favorable result (agree), represented by the value of 4. As can be seen from Figure 2, the mean for the majority of answers is between 3 and 4, with the lowest score of 3 for question 16 and the highest score of 4.3 for questions 3, 5, 10, and 11.

It is also important to establish standard deviation in order to determine the spread of the results from the mean. As can be seen from Figure 3, standard deviation ranges from 0.57 (q5) to 0.99 (q9).

Considering that for the purpose of the study the difference between options is 1, it is reasonable to assert that the numbers in each response are close to the mean of the dataset. However, it is necessary to acknowledge that in the survey at hand, the Likert scale provides ordinal data, which does not allow to conclusively establish the distance between the consequent responses.

In other words, from the strictly scientific point of view, there is no definitive way of establishing that the difference between “strongly agree” and “agree” equals the distance between “agree” and “neither agree nor disagree.” Thus, the numerical values can be considered close approximations and, by extension, both mean and mode are presented to corroborate the data obtained from median and interquartile range.

The median can be obtained by arranging the responses in a descending or ascending order and determining the number in the middle (or, in the case of the dataset at hand, two numbers). As can be seen, the overwhelming majority of the responses indicate “agree” (the second favorable answer) as a median. The two exceptions are questions 15 and 16, both of which indicate “neither agree nor disagree” as a median. The responses to question 9 place both “agree” and “neither agree nor disagree” as a median.

The interquartile range can be calculated using the values assigned to the responses in the process of calculating the mean. For the second response, both the first and the third quartile would be represented by the value of 4 (indicative of the “agree” response). Thus the interquartile range will be 4 – 4 = 0, indicating the greatest possible consensus. As can be seen in Figure 4, the consensus is generally high throughout the survey, with only two sets of responses (questions 9 and 16) displaying minor disagreement.

Qualitative Data

The qualitative data available to the researchers was in the form of the responses to the personal interviews. The interviews were conducted with the managers who were expected to possess relevant knowledge regarding the outcomes of training and sufficient understanding of benefit to cost analysis. Three responses were available to the research team. The analysis was based on a case study approach. Prior to processing the responses, a number of preset codes were formed that were expected to cover the topics identified in the research questions.

The codes for the first research question centered on the identification of the improvement in job performance associated with training. No codes corresponding to specific areas of improvement were formed at this stage. The codes related to the second research question focused on the reported possibility of calculating benefit to cost ratio and included a reference to the Kirkpatrick model, which was identified in the literature review as relatively common and thus was expected to be used or suggested as an option. Due to the sample’s area of proficiency, only one aspect of the third research question was expected to be covered in the interviews – that of the overall efficiency of the organization. Thus, it was included as a preset code.

The examination of the data revealed that two of the three responses to the first question were consistent with the codes confirming a positive impact of training on technicians’ job performance. Both responses to question 2 demonstrated the same result, describing training as “worthwhile” and “valuable” and referring to its risk mitigating effect as “vital.” All three responses to question 5 confirmed the possibility to calculate benefit to cost ratio. However, only one response referred to the Kirkpatrick model.

The analysis also determined the need for the introduction of additional codes. Specifically, it was discovered that question 3 dealt solely with the existing and proposed methods of training evaluation, which was not related directly to any of the research questions. However, it can be indirectly linked to research question 3 by identifying the existing barriers to the facilitation of benefits received from training. In a similar manner, the responses to question 4 identify the obstacles that hinder the benefits of training and are thus indirectly related to RQ1 and, partially, R3.

In order to address these issues, a set of emergent codes was introduced. The emergent codes specified the benefits according to the reported outcomes, introduced the factor of evaluation practices, outlined the common obstacles, and focused on the perceived barriers to benefit to cost ratio evaluation. The use of these codes provided the following results. The positive effects of training received by technicians included the improved speed, confidence, and reliability of their performance and increased their capacity for responsible decision making.

The main barriers to the facilitation of these benefits included the transfer of the staff to the areas where the acquired knowledge and skills could not be applied and the restrictions imposed by the need for supervision. The benefit to cost ratio can be calculated by determining the direct and indirect costs of the training program and comparing it to the benefits obtained from training. The Kirkpatrick model can be used for this purpose. The most apparent expected challenge to such approach is the inability to obtain financial data from the responses of the participants, and the greatest current barrier is the lack of robust formal means of evaluation of training outcomes, as shown by the responses to interview questions 5 and 3, respectively.

Conclusions and/or Recommendations

As can be seen from the analysis above, the first and second research questions were answered primarily through interview responses whereas the third one was covered in detail by the results of a self-administered survey. The results suggest that the training received by the technicians contribute to multiple aspects of their job performance, including faster completion of tasks, increased confidence, improved responsibility and reliability, greater autonomy in a decision-making process, and optimized time allocation.

However, the identified results are reported to vary greatly depending on the individual characteristics of the workers, with employee motivation being the most significant factor determining the success of the program. The most apparent barriers to the implementation of the knowledge obtained during the training are the deployment of the technicians to the locations where the knowledge becomes irrelevant and the inability to perform certain tasks due to the lack of supervision. In other words, the increase in job performance is both apparent and positive but is hindered by the lack of coordination at the organizational level.

The majority of respondents agreed that it is both possible and recommended to calculate benefit to cost ratio of the received training. Only one responded offered specific models suitable for the assessment and provided the information on their limitations. The majority of the responses pointed to the evaluation of financial data necessary for obtaining the ratio as the most apparent challenge in the process. All respondents reported the absence of methods for determining the viability of the received training due to the lack of qualification and dedicated staff. Thus, the most appropriate approach to establishing a benefit to cost analysis method would be to introduce financial measurement tools.

Finally, the responses to the overwhelming majority of the survey questions indicate a strong positive impact of training on the competitiveness of the organization. Specifically, the training was reported to improve employee satisfaction levels and increase employee retention (Q3, Q4, Q9, Q11, Q12, Q15, Q20), product quality (Q5, Q7, Q8, Q13, Q14, Q16, Q17, Q19), and overall efficiency of the organization (Q1, Q2, Q6, Q10, Q18). It is worth mentioning that Q9, Q15, and Q16 showed lower results (Mdn = 3-4, IRQ 2, Mdn = 3, IRQ = 2, and Mdn = 3, IRQ 2, respectively). However, as can be seen, two of three results are also characterized by high interquartile range.

In addition, neither of the results is representative of the trend observed within the identified subgroup. Therefore, it would be safe to consider the overall effect of training as beneficial for the organization’s competitiveness. The results are corroborated by the mean which, in the majority of cases, is consistent with the median and confirmed by the small standard deviation values. Admittedly, the latter is only relevant for determining the overall trends, but, once corroborated by the median and IQR descriptors, can be considered a confirmation of the findings.

Considering all of the above, it is reasonable to describe training program conducted at Global Airspace Logistics beneficial for the competitiveness of the company in terms of employee satisfaction and retention, product quality, and overall organizational efficiency. Therefore, it is recommended to incorporate a systematic measurement of training outcomes and financial benefits in order to produce a meaningful benefit to cost ratio and optimize the workforce allocation to minimize waste of resources associated with deployment and lack of supervision.

Reference List

Barnett, K & Mattox, J R 2010, ‘Measuring success and ROI in corporate training’, Journal of Asynchronous Learning Networks, vol. 14, no. 2, pp. 28-44.

Brauchle, P E & Schmidt, K 2004, ‘Contemporary approaches for assessing outcomes on training, education, and HRD programs’, Journal of Industrial Teacher Education, vol. 41, no. 3, pp. 1-14.

Fletcher, J D & Wind, A P 2013, ‘Cost considerations in using simulations for medical training’, Military Medicine, vol. 178, no. 10, pp. 37-46.

Grohmann, A & Kauffeld, S 2013, ‘Evaluating training programs: development and correlates of the questionnaire for professional training evaluation’, International Journal of Training and Development, vol. 17, no. 2, pp. 135-155.

Reio, T G, Rocco, T S, Smith, D H & Chang, E 2017, ‘A critique of Kirkpatrick’s evaluation model’, New Horizons in Adult Education and Human Resource Development, vol. 29, no. 2, pp. 35-53.

Williams, R C & Nafukho, F M 2015, ‘Technical training evaluation revisited: an exploratory, mixed‐methods study’, Performance Improvement Quarterly, vol. 28, no. 1, pp. 69-93.

Cost of the Shipment of Goods

Because the production of aircraft is based on supply chain management, the logistic activities should be carefully planned. Specific focus should be made on the delivery and shipment of spare parts (Goldstein, 2002). All these procedures also contribute to the expenses of shipment of goods.

Transportation Costs

Choosing Embraer Jet for transporting goods across Brazil can significantly reduce the transportation costs because the company can sustain a competitive advantage over other world-known brands, such as Boeing and Airbus.

Handling Expenses

Pier Charges

Pier charges should be gathers from shipments on domestic territories, as well as from foreign ships.

Wharfage fees

Warfare fees are also associated with the handling expenses. The aircraft company, therefore, should ensure that there are quays where shipment procedures could be carried out. Embraer Jets, therefore, must consider expenditures spent on reaching specific destinations within the specific terms. Such a strategy corresponds to the international standards that contribute to efficient expertise in cost management (Cateora & Graham, 2011).

Loading and Uploading Charges

Loading and unloading charges should be carried at specific locations with warehouses for storing goods. Therefore, it should also consider the costs the company undergoes while planning destinations and transportation of goods and passengers. Defining the most popular location is important.

Insurance Costs

Embraer Jets insurance presupposes that experienced agents invite underwriters who can establish favorable rates (Peng, 2009). Hence, Embraer aircraft can provide expert agents who will consider the most effective conditions and ensure the highest discount rates.

Customs Duties

Customs duties procedures should also be introduced to enhance protection mechanisms and improve the quality of goods transportation by Embraer Jets.

Important Taxes and Value-added Tax

The taxes should be imposed on imported goods.

Wholesale and Retail Markups and Discounts

The evidence proves that wholesale markups vary, but the average rates will amount to 20 % of the production costs. Discount types will be practiced during the flights to foreign locations, including the United States. Compensation deal is another type that should also be introduced.

Company’s Gross Margins

Retail Price

Due to the fact that Brazil includes mostly large-scale retail outlets, including such stores as Walmart, it deals predominantly with small-business companies (Bell, Lal, & Salmon, 2011). In this respect, the purpose of airline services lies in establishing moderate prices for increasing amounts of retailed goods.

Methods of Payment

Cash in Advance

Cash in advance payments is not widely used. Therefore, the company will not accept this method of payment.

Open Accounts

An open account is the most efficient means of payment because it implies sales the possibility of using credits. Customers, therefore, should pay in advance to make use of aircraft services.

Consignment Sales

Consignment sales are appropriate to use when they concern goods transportation. In such a manner, the company can protect itself from possible risks of payment procedures. Consumers also use this type of payment to minimize the risk of injuries.

Sight, Times, or Date Drafts

Date draft provides customers with an opportunity to pay for the shipment on the fixed date of delivery. Such type of sales is beneficial for consumers and, therefore, it can increase demand for the proposed services.

Letters of Credit

Letters should be applied during foreign voyages, as well as transportation of exported goods. Moreover, the terms of payment are beneficial in terms of the document.

References

Bell, D., Lal, R. & Salmon, W. (2011). Globalization of retailing. The Global Market. Web.

Cateora, P. & Graham, J. (2011), International Marketing, US: Irwin McGraw.

Goldstein, A. (2002) From National Champion to Global Player: Explaining the Success of Embraer. UK: University of Oxford.

Peng, M. W. (2010). Global Business. New York: Cengage Learning.

Introduction

In the aerospace industry, each component is time-critical. In addition, scores of management tools are used to improve the efficiency of material management. Like other sectors, the aerospace industry is faced with various inventory problems. For example, firms have to determine the number of raw materials needed to meet clients’ needs.

In this paper, the author will provide a report on an article touching on the application of the constraints theory in the management of inventory problems in the aerospace industry. Among other issues, the pros and cons of applying the theory of constraints (TOC) will be analyzed. The article is authored by Chou, Lu, and Tang (2012). It is titled Identifying inventory problems in the aerospace industry using the theory of constraints.

Inventory Problems in the Aerospace Industry: A Critical Analysis

Application of the Theory of Constraints in the Aerospace Industry

Most aircraft manufacturers acknowledge the need to improve their operations. However, they face numerous problems in their daily activities. Such issues include the high costs of warehousing components and materials (Bhatija 2013). In their article, Chou et al. (2012) hold that TOC helps aerospace managers to identify these problems and find appropriate strategies to resolve them. The theory helps in production improvements, inventory control, and logistics (Fitzsimmons & Fitzsimmons 2007).

According to Chou et al. (2012), TOC is a thinking process. The system-based approach to management uses elementary logic to determine the primary relations affecting performance (Gupta & Snyder 2009). The supposition’s effectiveness in resolving constraints is facilitated by its three major components. They include a five-step focusing process, a set of system-oriented principles, and robust logic tools. Typically, TOC views a corporation as a system of interconnected components (Chou et al. 2012).

The five-step procedure guides the management of an organization’s leverage points. To this end, managers in the aerospace industry should focus on system constraints (Schroeder 2008). As a result, the overall performance of the organization is improved. The five steps start by identifying key constraints. It is followed by finding ways to exploit them, subordination, obliteration, and a repeat of step one (Chou et al. 2012).

In the article, Chou et al. (2012) are of the opinion that robust logistic tools enable managers to identify major problems in the organization and their core causes. They are significant in the representation of opportunities for administrative improvements. For TOC to effectively resolve the problems, three main aspects must be analyzed (Chase, Jacobs & Aquilano 2006). They include the elements that need to be changed, the goal of the modification, and the mode of implementing the change (Haksever et al. 1999). The robust tools employ sufficiency or necessity logic to help managers understand the outcomes of the current situation.

Inventory Problems and Appropriate Strategies

In the aerospace industry, TOC involves the use of logic diagrams to manage the current system (Bhatija 2013). Most inventory setbacks result from poor management of records turnover, delayed delivery because of material scarcity, and losses from configuration changes. According to Chou et al. (2012), these problems must be addressed to enhance the achievement of goals set by organizations in the aerospace industry.

To ensure effective turnover, managers should facilitate speedy internal inventory flows (Chou et al. 2012). The inventory storage time is reduced significantly. Failure to do this leads to supply chain delays (Chase et al. 2006). As a result, the production process is affected, leading to delays in delivery. Consequently, the company is forced to compensate clients according to the contractual agreements (Chou et al. 2012).

To resolve the inventory problem resulting from configuration changes, companies should use appropriate procurement means. They include flexible ordering and purchasing in batches. Acquisition of excess materials should be avoided (Schroeder 2008). The reason is that surplus products turn into waste and occupy space that could be used for other purposes. As a result, they lead to prolonged inventory storage and increased costs (Chou et al. 2012). To facilitate procuring the right amounts of materials, companies can apply the Economic Order Quantity (EOQ) approach.

Pros and Cons of Applying the Theory of Constraints

Pros

TOC helps to identify problems in inventory management and understand the challenges associated with high inventory administration costs (Gupta & Snyder 2009). The theory helps aerospace companies to improve processes, delivery rates, production time, and inventory turnover (Chou et al. 2012).

Cons

TOC involves identifying the major constraints of impacting performance (Chou et al. 2012). However, it can be a challenge to identify the constrictions. The theory can help resolve a constraint caused by another restraining factor. In addition, it may focus on one that is unrelated to the current hold-up. As a result, managers may waste resources on setbacks that are not critical to the success of the corporation (Chou et al. 2012).

According to Chou et al. (2012), TOC only works efficiently in tackling the current time frame issues affecting a business. It deals with actual situations. As a result, it limits itself to short-term consequences. Consequently, managers must analyze the long-term effects of their work on the constraints identified (Haksever et al. 1999). In instances where the short-term outcome remains valid for a long time, the strategy specified by TOC may be suitable (Schroeder 2008). However, if the short-term effect does not last, the manager is required to identify other constraints that need to be eased. Another limitation of TOC is that it does not consider variable factors. Certain constraints may vary independently from the action applied (Chou et al. 2012). As a result, a manager might be forced to use additional data.

Conclusion

The primary goal of an aerospace company is to meet the needs of clients and minimize costs. However, a shortage of materials and inventory problems impact negatively on the performance of companies. TOC helps managers to analyze their business. Possible weaknesses are identified and addressed. Due to its effectiveness, the theory has been applied by a wide range of companies. They include Boeing and Delta Airlines. In addition, it is used in academic disciplines, for example, in project management.

References

Bhatija, N 2013, Aerospace industry, Random Publications, New Delhi.

Chase, R, Jacobs, R & Aquilano, N 2006, Operations management for competitive advantage, 11th edn, McGraw-Hill, New York.

Chou, Y, Lu, C & Tang, Y 2012, ‘Identifying inventory problems in the aerospace industry using the theory of constraints’, International Journal of Production Research, vol. 50 no. 15, 4686-4698.

Fitzsimmons, J & Fitzsimmons, M 2007, Service management: operations, strategy, information technology, 6th edn, McGraw-Hill, New York.

Gupta, M & Snyder, D 2009, ‘Comparing TOC with MRP and JIT: a literature review’, International Journal of Production Research, vol. 47 no. 13, pp. 3705-3739.

Haksever, C, Render, B, Russell, R & Murdick, R 1999, Service management and operations, 2nd edn, Prentice Hall, New Jersey.

Schroeder, R 2008, Operations management: contemporary concepts and cases, 4th edn, McGraw-Hill, New York.

Introduction

This industry review is a survey of the Aerospace industry in China. It will analyze the industry on both commercial and military aviation development in the recent past, as well as the space program. It identifies the current operations, developments, and challenges facing the airline industry in China. It will be outlining the operational efficiency, financial and workforce efficiency in the commercial and military aviation developments, and the underlying factors behind the successful development of this industry in modern china (Bnet).

This was done in the event of establishing the overall developments processes of the industry in terms of accuracy, efficiency, and reliability. This will outline the success story of the Chinese as they have become the fastest-growing economy in the world in almost all sectors including the aerospace industry (Covault, 2003).

Overview of the aerospace industry in China

The Chinese aerospace industry has experienced a lot of developments that are aimed at enabling it to become the aerospace giant in the 21 century. Numerous research and development programs have been put in place and thus have led to an increase in the development in both the commercial and the military sectors. This industry has faced both negative and positive circumstances and the extensive research and development initiatives have increased the chances of ever manufacturing commercial and civil aircraft.

The Chinese aerospace performance has been lopsided, satellite launches capabilities, ballistic missile development, and the increase in the demand of all types of planes have made them begin indigenous production of aircraft in the recent past (Shambaugh, 2004).

Commercial and military aviation developments and programs

China boosts to have the third-largest civilian market which accounts for a quarter of the world’s commercial airline fleet, the dream of building a domestic commercial aerospace industry is beginning to take effect. A few strides can be seen e.g. the development of ARJ21-700 has been complete and undergoing the final tests. In June 2009 Airbus china which is owned 49% by airbus unveiled the first airbus A320 with the capability of producing four of them per month. The long-term plan is to build planes for commercial purposes in the international market by the year 2020. Most of the components used by foreign planes are built in china with over 200 enterprises building airplane parts (Schweitzer, 1992).

The military and missile production sectors have also experienced their share of growth and developments and have been relatively organized and capable (Iannotta, 2001). This became china’s top aerospace priority after the cold war as it developed nuclear weapons. Only China has also demonstrated mastery of all aspects of a comprehensive aerospace industry:

1. Production of aircraft and SLV/missiles
2. The supporting engineering, materials, and systems.

Plans and prospects in the aerospace industry

Beijing’s aerospace focus is normal for a rising great power. All states seek security; potential great powers seek security through aerospace. Countries of significant size, population, and development level naturally compete for great power status: contingent on regional domination, it confers significant security. Regional domination hinges on military superiority, especially the capacity to determine the nature of conflict and to deter it before it occurs (e.g. satellite detection of enemy military deployment followed by threats of sanctions if troops were not withdrawn). Military capacity and societal support for governmental grand strategy demand economic growth. The dual use potential of most technology unites military and economic sectors (Yunzhi, 2003). It hopes to attract. The fund will likely play a role in helping China towards its goal of one day building a jumbo jet to take on the Airbus-Boeing duopoly (Marsh, McGregor, and Mure, 2003). These developments can be seen in the following events in the industry;

Development of a civil/commercial aviation plane (AVIC)

The absorption of aerospace technologies and the production techniques in the production of parts for exports has increased the exposure of the Chinese in this sector. This has fuelled development and the demand is expected to surpass that of Europe and the US (People’s). Mr. Yata explained;

“As demand in Europe and the United States slows, the Asia-Pacific region will be a growing market for commercial airplanes in the coming two decades to fit increasing demand for tourism, passenger and freight transport” (2009).

Due to this projected demand, the government projects have intensified and Beijing’s political goals support a program of technological development based on grand strategic, not on short-term economic, needs. Comprehensive aerospace capability is desired but has not yet been achieved. Aircraft manufacturing has taken a back seat to the more pressing priority of missile development and thus has received inadequate resources. In the recent past, this has been changing and we expect tremendous developmental strategies in the future.

The completion of the AVIC project marked the conquest and the beginning of a modern aerospace giant which would compete with the US and Russia on a global scale (Koubi, 1999).

AVIC’s competitiveness with existing models i.e. Boeing and Airbus

Competition with some international airplane manufacturers had been minimal since China is yet to develop a large courier but in the future, the favorable conditions e.g. Cost and capacity advantages in the Chinese market would have a great impact on the market share of those companies.

Space program

Space development is a reflection of comprehensive national strength in any state and thus china is pursuing it. Particularly attuned to this ethnonationalism measuring stick, Beijing regards aerospace as its most effective overall technology driver and diffusion mechanism. Rather than seeking mere space spectaculars, in recent years Beijing has developed aerospace capability methodically, without overemphasizing manned spaceflight.

The lessons of the Space Race extend far beyond the Cold War. The Space Race provides an excellent example of how modern great powers naturally seek security through aerospace development, giving a historical perspective to the initiatives of today’s developing aerospace powers, such as China. The Space Race provides an excellent example of how modern great powers naturally seek security through aerospace development, giving a historical perspective to the initiatives of today’s developing aerospace powers, such as China. Space programs in china are prioritized since they are addressing the national objectives of:

1. Military modernization
2. Infrastructure development in the economic, technological, communication, etc.
3. Resource and environmental management efficiency
4. The creation of the international status

Boeing role in the development of the industry

Boeing’s entry into the Chinese market can be dated back to the early 20th century has been the most used plane. The entry of airbus in the 1970s shaped the competition ground, with the successful entry of airbus in the Chinese market and currently, Airbus revenue in china surpassed that of Boeing (Westlake, 1988). Many components made for Boeing are built-in china and this has contributed to an increase in the absorption of aerospace technologies and production techniques in the partnerships (Fulghum, 2004). In the recent investments in China to tap the increasing demand as Mr. Yata said that;

“To Boeing, China would be the second-largest market for commercial planes in the next two decades….and adding that the country would buy an estimated 400 billion U.S. dollars’ worth of commercial airplanes, or 3,700 units over the period” (2009).

Conclusion

We have identified several areas relating to an aerospace sector that need to be addressed to increase the safety of commercial and military components from origin to destination. We believe that standardized procedures and actions should be implemented by operators, carriers, and cargo facilities to prevent any security or operational lapse in the sector. We further believe it is in the best interest of the air industry to use this consistent set of procedures to safely move commercial and military components (Spaceref). China may also find it difficult to establish a domestic commercial aerospace industry that manufactures everything from the ground up because this sector truly is a global industry.

The airport modernization programs and associated developments such as the new aerospace policy are ultimately at a nascent stage of their development. Consequently, it is not unexpected that there will be teething problems, delays, and some pain as the system adjusts to a new paradigm. All those involved are learning along the way. However, the frustrating issue for the main parties involved is that the key policy decisions have been taken without sufficient consultation with stakeholders and are announced late in the day, creating significant planning challenges.

References

1. Bnet. (2009). Asia-pacific region to become worlds leading aviation market in 20 years, Boeing.
2. Covault, C. (2003). Space for china. Aviation week and space technology, 30.
3. Fulghum, D. (2004). Battle for the Amazon: Two new types of intelligence-gathering aircraft are flying missions to ward off ecological disaster and crime. Aviation Week & Space Technology, 46.
4. Iannotta, B. (2001). China’s divine craft. Aerospace America, 37.
5. Koubi, V. (1999). Technology races. international organization, 53(3), 537.
6. Marsh , P., McGregor, R., & Mure, D. (2003). OECD ranks China third in R&D spending. Financial times.
7. People’s (2009). Asia-pacific region to become worlds leading aviation market in 20 years, Boeing.
8. Schweitzer, P. (1992). Our Thieving Allies. new york times. A21.
9. Shambaugh, D. (2004). Modernizing china’s military: progress probrems and prospects. Berkeley: university of California press.
10. Spaceref. (2000). China’s Space Activities, a White Paper,” Beijing: The Information Office of the State Council.
11. Westlake, M. (1988). Aviation and Aerospace 88: China—Joint Ventures and Opportunities. Far Eastern Economic Review, 50-55.
12. Yunzhi, L. (2003). Study on Operational Effectiveness Evaluation of a Space Equipment System. Journal of the Academy of Equipment Command and Technology, 14(2), 24.

Introduction

The aerospace industry is among the most complex businesses to undertake as the business involves several commercial challenges that are often difficult to comprehend. This commercial investment normally faces a series of challenges ranging from financial deficiencies, political interferences, social problems, technological complications, to legal dilemmas. Although most of the companies strive to excel in the highly challenging environment through revising and reforming their operational strategies, their chances of business survival are often miniature.

Bombardier Aerospace is among the globally renowned dealers and manufacturers of private jets with long-term survival record of several decades since its inception (Bombardier 18). Despite its massive performance over the years, the company has been facing a number of irresistible challenges regardless of its strategic management plans (Bombardier 18). Central to such problems, this essay focuses on providing a comprehensive critical analysis of the Bombardier Aerospace, while focusing on its several external and internal factors.

SWOT and PESTEL in the Case of Bombardier

SWOT is a business analysis model that stands for the Strengths, Weaknesses, Opportunities, and Threats that determine the survival of a business in a certain commercial space (Valentin 94). The SWOT business analysis tool is a strategic assessment instrument that helps analysts and managers to identify the lapses in the current operations of a company and provide possible solutions to fix the identified problems (Valentin 94). The case of the Bombardier Company contains identifiable strengths, weakness, opportunities, and threats. PESTEL (Political, Economic, Social, Technological, Environmental and Legal components will also make up the analysis.

Threats to the Company

Legal dilemmas

A significant threat to the strategy of the Bombardier Company in the unveiling of the C-series airplane model is the legal dilemma that the company is facing. Neighboring countries are using the World Trade Organization (WHO) regulations to create legal controversies that seem to be veracious to the existence of the C-series scheme (Bombardier 25). WHO controls the international trade and it is a powerful institution that presides over the business agreements between the transnational firms. A significant threat to the launch of the C-series model is the previous trade litigations between Canada and Brazil that concerned trade fairness.

Technology and modern innovation

In PESTEL, technology is a crucial facet in determining the successful development of a desired business or project (Mahara 366). The Bombardier Company has failed to remain resilient or adaptive to the modern technologies that spur innovation and growth in the aerospace company. Its chief competitor has consistently evolved together with the remarkable transformations experienced in the aerospace industry. Such a levelheaded strategic progress makes Embraer viable to future evolutions. Even as the company seeks to introduce the C-series into the commercial aerospace business, it requires adaptive techniques towards innovation that would make C-series to survive.

Regional Market Dominance

The PESTLE model considers the social component of a business as a determining factor in the success of a business in a competitive market (Mahara 366). The company still enjoys extensive regional market dominance across most of the European nations where the aerospace business is still lucrative and in constant demand. As the entire center of attention on the present development and market dominance remains focused on the development of the new C-series airplane model, what threatens the company is the sudden shift in service provision techniques.

Customer market demands

The Canadian aerospace industry experiences problems with customer preferences as witnessed in the case of the C-series project. The company is still reliant on the regional jet market to unveil its mega C-series scheme, which is dependent on the consumers, who are very selective about the structural design of the planes (Bombardier 21). In the commercial aerospace industry, market entry is a crucial issue because it defines the future of the survival of a company. Commercialization of the C-series may face threats from the customer insights and choosy behaviors that are likely to hamper its market entry.

Weaknesses of the Company

Technological lapses

Bombardier Company has been using conventional technologies to commence its innovation and in the case where an urgent technological need has arisen, the company has relied on the hired experts to assist in the innovation. Hiring external technological experts to launch an emergent innovation has been costly for the company even as the innovations fail to last for long before they crumple (Bombardier 17). Although the C-series may emerge triumphant in the regional market, its reliance on the hired technologies may remain short-lived. Its competitor, the Embraer, has proved strategic, in dealing with innovations, and often releases new models only when the market allows.

Internal business decision demands

The Company has weaknesses in its internal decision making processes and such complications make the future of the C-series a complex engagement to consider. The prevailing complexities in making the investment decisions between the company and the investors are a problem for the future of the C-series model (Bombardier 65). Portraying a weakness as whether to continue with conducting researches about the viability of the innovation or venture into the C-series model is a significant internal weakness in decision-making. The external pressure that affects the decision on the investment deal is putting the company at a risk of external manipulation.

Economic challenges

Through a financial statement analysis, the comprehensive government financial support offered by the Bombardier Company is ruining its financial stability. The prevailing extensive government lending, subsidies and leasing strategies are making the company contingent and it is losing its sovereignty in making independent investment decisions (Bombardier 33). The financial statement of the company reveals its financial weaknesses in the sense that its total annual revenue seems remarkably low compared to the annual amount invested (Bombardier 30). The income tax imposed on its present operations exceeds the operating income and the net income by far, and this makes the innovation susceptible to the financial crisis.

The undeterred political interests

Bombardier Company is at present unable to deter the political interests aimed towards the innovation on the C-series airplane model. The company lacks an effective autonomy to override its financiers in the project because the government seems to control most of its present operations and market interests (Bombardier 89). The joint efforts of the UK and Canada to empower the company financially in the targeted project may be unsuccessful because of the political demands that Canada has vested in its aerospace innovations (Bombardier 89). Financing the project may result in controversial issues between the two aspiring investors.

Alternatives to the Dilemma

Reducing external borrowing

All the dilemmas facing the Bombardier Company are resulting from external government influence and inabilities to make informed decisions on product renovation (Bombardier 76). The company is lagging behind technologically because the external financiers are only providing monetary support, but are failing to consider the market demands and trends that are placing the company at a decision quandary (Bombardier 83). The company should opt to renovate its present business portfolio to match the standards of the aerospace industry. Bombardier Company can consider reducing external borrowing to have independent autonomy over its investment decisions over the pending C-series scheme (Bombardier 93).

Enhancing aerospace technology

The Bombardier Company is using conventional technologies that are not only retrogressive to the business, but also dangerous to the progress of its mega aerospace innovations (Bombardier 89). Optionally, instead of risking the company in investing in a controversial investment, the Bombardier Company should opt to renovate its present innovation through investing in the medium size jets (Bombardier 90). Since the initial strategy is to broaden the regional market through improving the aerospace technology in the European market, the medium size airplanes will accommodate the regional demand and provide the desired comfort.

Recommendation

Currently, the company seems to run into debts, while its investment returns are still miniature. The margin between the investment ratios marked by the total operating expenditure and the overall size of revenue and the gross profit combined, are very miniature for the economic survival of the company. The C-series project requires an external investment support to maintain its initiation and survival. The experience of the company in manufacturing business jets is still immature and risking the large sums of finances into a new business project of that nature would deem ineffectual for the company. Hence, abandoning the idea is ideal.

Conclusion

More frequently, businesses plunge because they venture in trial projects without a strategic plan. Even with a strategic plan, a company remains unsafe in a trial investment when its financial base is weak and when it is relying on external financiers to support the trial project. As a strategic alternative, Bombardier Company should reevaluate its partnership with the external investors to ensure an effective approach to the aerospace market. The company should adopt medium size jets that may require a little money compared to the business jets.

Works Cited

Bombardier, 2011, Leading: Brighter Skies Ahead; new tech Rides the Rails. Web.

Mahara, Tripti. “PEST- Benefit/Threat Analysis for selection of ERP in Cloud for SMEs.” Asian Journal of Management Research 3.2 (2013): 365-373. Print.

Valentin, Erhard. “Away With SWOT Analysis: Use Defensive/Offensive Evaluation Instead.” The Journal of Applied Business Research 21.2 (2005): 91-105. Print.

An overview of Gulfstream Aerospace Corp

In the jet aircraft manufacturing business, we cannot ignore the name of Gulfstream, as it is legendary in innovation. It employs over 9,700 people. The history of the company began when Grumman Aircraft Engineering Co was changed to Gulfstream Aerospace Corp. during the 1950s. Now its operation is extended to seven major locations offering a wide product line with a strong commitment to society.

Does Gulfstream use location to maximize the effectiveness and efficiency of its supply chain?

One of the distinctive factors which make Gulfstream different is its supply chain. The company has a strong relationship with its suppliers, involving them in the product design and development, sharing of revenue, etc. We can say that the location preference has helped the company to maximize the effectiveness and efficiency of its supply chain. One example is the choice of Gulfstream’s Savannah location. The selection of this location was based on the possibility of easy transportation of raw materials and other resources through air, sea, and rail. In the Savannah location, G500, G550, G350, G450, etc., are manufactured, and the raw materials required are outsourced from different countries. Tails, floors, and engines are imported from Holland and Germany through Atlanta International Airport, which is then taken in trucks to the plant. From the Port of Amsterdam through Holland canals, Fokker is shipped to the Port of Savannah. The rail logistics is also used, and we can see one rail shipment every week. The wing section of Vought aircraft is moved from Texas by rail to Savannah. Savannah location has helped the company in the production and delivery of services on time. Also, the selection of location helped in the economy of land, labor, capital, design, and production activities.

How would you describe the relationship between Gulfstream’s “just in time” manufacturing and its strategic approach to choosing locations?

“Just in time (JIT)” manufacturing is a strategy or technique used for ensuring adequate and timely production. JIT is defined as a “production process based on JIT inventory system which allows faster response to customer demands without large finished goods or goods-in-process inventories.” (Just in time manufacturing, 2009, Definition, para.1). The company Gulfstream follows the strategy of ‘just in time’ manufacturing as this strategy can offer many advantages to the company in the manufacturing process. Some of the main advantages are elimination or reduction of wastages, improvement in productivity, etc.

There is a close relationship between’ just in time production and selection of the location of production. If the location of production is at a remote place, a company cannot enjoy the advantage of ‘just in time manufacturing, in full. Gulfstream has a specially designed system of ‘just in time manufacturing in which the required inventories are put in a kit. There will always be three kits with the company, that is, one in the warehouse, one in transit, and the third one in site or place of manufacturing. The company designed a logistic system in such a way that when the kit at the manufacturing place gets used, the kit, which is in transit, will reach the manufacturing place. By this time, the kit, which was in the warehouse, will start its journey to the place of manufacturing, and at this time, a new kit will get inside the warehouse. For easy implementation of this system, location advantage is required. Gulfstream enjoys a location advantage at its Savannah location as it is in the central point of the East Coast with full-fledged facilities for all means of transportation. This is advantageous because importing from and exporting to all parts of the world would be convenient and easy.

Does Gulfstream’s manufacturing headquarters in Savannah optimize the “7 Keys to Location” defined in the Mentzer article?

Site location, indeed, has become a more critical decision for supply chain leaders as supply chains have stretched, companies have expanded, and transportation costs have soared. Today a poor location decision can have much greater and more immediate effects on operating efficiencies and cash flow.” (Mentzer, 2008, para.3). Mentzer has developed 7 Keys to a location like land, labor, capital, sources of supply, production, markets, and logistics. We can say Savannah satisfies the above seven keys to location and optimizes the production. Expansion of the company in Savannah is possible due to the large tract of waterfront land and low labor costs. Also, it is relatively less expensive to start or do business over here as the capital cost is low. Import and transportation of raw materials are possible as “Savannah is one of the southeast’s leading seaports and cargo hubs. Shipping activity is focused on the Port of Savannah, which is supported by two railroads and two interstate highways as well as Savannah International Airport.” (Savannah: Economy, 2009, Commercial shipping, para.1). Due to this, Savannah has adopted a ‘Just in Time’ manufacturing system, which helped the company in low inventory levels and smooth production cycle. The consumers targeted include both military and business houses. Savannah location has got ODA (Organization Designation Authorization) certification for the design and production, which shows the success of optimization of 7 keys to location, thus making Gulfstream Aerospace Corp. distinct.

References

1. Just in tome manufacturing: Definition. (2009). Business Dictionary.com.
2. Mentzer, J.T. (2008). 7 keys to facility location. Supply Chain: Management Reviews.
3. Savannah: Economy: Commercial shipping (2009). City Data.com. Web.