...Embraer: The Global Leader in Regional Jets 1. Embraer’s success as a global competitor can be separated into two distinct periods – pre-privatisation and post-privatisation. Pre-privatisation, Embraer was founded on the back of the Brazilian government’s push for developing aeronautics and as such it was given special treatment due to its position as a symbol of Brazilian nationalism. As such, it was able to achieve success initially due to many initiatives set up to promote aeronautic research by the government. Of particular importance is the subsidies received by Embraer, which helped it to achieve the majority market share in the commuter turboprop market with its ‘Bandeirante’ aircraft. The subsidies were believed to be in the region of 39-44% as claimed by their competitor Fairchild, which undoubtedly played a huge role in their early success. However, Embraer began to falter when a series of negative events began to hurt its profits when budgetary pressures as a result of macroeconomic difficulty in Brazil meant that they could no longer depend on subsidies to help boost sales. In addition, their political ties led to the development of CBA 123, which ultimately turned out to be a huge failure. To help examine Embraer’s post-privatisation success, we can use an adapted version of ‘The Four-Tiered Structure of Markets’ found in Khanna & Palepu (2006). In this adapted version of the regional aircraft manufacturing industry (Apendix 1), there are only three tiers namely...
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...Innovating with Ingenuity Chapter 8, Innovating with Ingenuity, shows us how companies around the world have been innovating. It is important to understand what ingenuity really means. It is defined as the quality of being ingeniously inventive, creative, and practical; inventiveness. The chapter starts out with the quote, “When people ask me ‘What is your competitive advantage?’ I say, ‘The quality of our engineers.’” This was stated by Mauricio Botelho, President and CEO of Embraer (A successful Brazilian aircraft manufacturer) from 1995 to 2007. John Engler, president of the National Association of Manufacturers, in 2005 said that the United States is and remains on being the world’s frontrunner in innovation. He emphasizes that other countries are advancing in technology as enthusiastically as we are and that therefore we cannot assume we are safely ahead of the world. Throughout the chapter we are shown how challengers have been investing in innovation by capitalizing in research and development. Some examples included are companies like ZTE, a Chinese telecom equipment maker that spent 12% of its $3 billion 2006 revenue on research and development. In accordance to VentureOne, Venture capitalists invested $1.89 billion in Chinese companies in 2006. In total, from 2005 to 2006 there was a 34% increase in investments in Chinese information technology firms. Governments are also becoming aware of how important innovation is when it comes to modernization. For example...
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