Competing in the global aerospace supply chain: The case of the Canadian aerospace industry
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Competing in the global aerospace supply chain: The case of the Canadian aerospace industry Isabelle Dostaler
Received: 14 January 2012 / Revised: 30 August 2012 / Accepted: 30 January 2013 / Published online: 19 February 2013 # Springer Science+Business Media New York 2013
Abstract In light of the vertical disintegration of the global aerospace industry, this paper reports on a study that was commissioned by Industry Canada to evaluate whether Canadian aerospace firms have been able to develop the new set of manufacturing and managerial capabilities required to compete in the global aerospace supply chain. A strategic management framework was used to assess the fit between the key success factors of the external environment and the resources and capabilities of the firms studied. The results indicate that although smaller aerospace firms seem to possess technological and engineering skills that are vital strengths in the aerospace industry, better marketing efforts would enable them to enlarge their client base and intensify their participation in the global aerospace supply chain. Keywords Aerospace industry . Supply chain . Strategy . Key success factors . Capabilities
1 Introduction The aerospace industry is considered a highly strategic sector in all advanced and developing countries of the world. Aerospace vehicles are the ultimate means of transportation, which have mankind to transcend its limits. A solid national aerospace industry is therefore a symbol of strength. Countries may also assert their sovereignty by being recognized players in the defence segment of aerospace. In addition, aerospace is an industry with high technological content; over the years, aerospace innovations I. Dostaler (*) Management Department, John Molson School of Business, Concordia University, 1455 de Maisonneuve Blvd. W, MB 13-337, Montréal, Québec H3G 1M8, Canada e-mail: [email protected]
have been used to develop and manufacture a wide variety of products. A number of structural changes have taken place along the global aerospace supply chain in recent years. A risksharing approach in which the overall development and assembly of an aircraft is divided between different companies is now a well-established industry recipe (Spender 1989): various first-tier suppliers are now responsible for performing the detailed design work and manufacturing the major subassemblies of airplanes, while Original Equipment Manufacturers (OEMs), such as Boeing, Airbus and Bombardier act as “system integrators” (Cohen 2003; Ferreri 2003; Pritchard 2002). This business model has clear financial advantages because it allows aerospace OEMs to invest less capital into new programs. While the system integrator business model multiplies business opportunities for lower tier aerospace suppliers, it also raises the pressure for low cost, quality, dependability, and flexibility. In light of this vertical disintegration process, this paper reports on a study that was commissioned by Industry Canada to examine the competitive position and perform
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