MANAGEMENT DECISION CASE: A New Global Competitor: Commercial Jetliner Productio
ID: 356286 • Letter: M
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MANAGEMENT DECISION CASE: A New Global Competitor: Commercial Jetliner Production Begins in China lmost four million parts is a daunting task one at easy (as Boeing itself found with the much-delayed but which only a handful of companies in the entire world finaly released 787 Dreamliner) In this case, Comac has are currently succeeding (Boeing and Airbus, to name chosen a path similar to that used by both Boeing and Airbus Commercial Aircraft Corp of China, is vying to join the the world to produce diffierent parts of the plane. Those ranks of successfull companies in this marketplace in parts wil then be transported to Comac's main assem roughly hailf the time that most industry experts think bly building near Shanghall Ten contractors working to is possible. Comac is embarking on an effort to build a provide components are located in the United States commercial jetliner that will compete directly with the Others ane from Austria, England, Ireland, France, Swit Boeing 737 and the Alirbus A320, the two most popular eland, and Japan Many of those suppliers have signed commercial jet products in the world. The conpry has jai" e eement with Cont whie other consistently hawked that it will have the jet aitomein have not …so out of concern that their "telectual 2014, just six years after beginning the project. Many property and trade secrets wil that first flight will not take place at least until 2015, 2016 or first C919,one certainty is that its new cadre of relation- 2017.Regardless of when it actualy hits the market, the ships with the international partners will go a long way production and marketing of this plane are an example toward determining the project's success for how more business may be conducted in the future Other factors determining Comac's success include Comac's product is the C919, where the C refers to operating expenses such as fuel Jet fuel is a major China, the number 9 in Chinese sounds similar to a di expense for the firms and governments that purchase ferent word meaning forever and the 19 stands for the commercial jets globallyc thus, the weight of a plane 190 passengers the plane will carry (clever, eh). The i s a significant concern for potential buyers. Previous Chinese govemment has been pumping money into atempts by other Chinese aircraft manufacturers at Comac in an effort to lessen the 70 percent worldwide building a plane were abandoned because the plane by Boeing and Airbus was too bulky and inefficient. In addition, regulatory This project is important to China specifically because issues will play a big role in the success of this product the country is projected to surpass the United States in and Comac will have to learn to effectively deal with the air passenger traffic by 2032 and they will need an addi entire world network of air travel agencies. They have tional S.580 planes to satisfy that demand. In US. dol no experience with satisfying FAA requirements in the lars, the value of that many planes is over $780 bitlion United States or similar requirements by govemment An indicator of China's demand growth for air travel in entities in other parts of the world so they have hired the near term is that between 2011 and 2015 the gov a consultant from the United States to help them learn ernment will construct another 80airports and expand to work with these systems and gain needed approvals 100 others. Some of those new airports and expansions Whether Comac can overcome all of these chal- are occurring in such remote locations that workers lenges to gain market acceptance of the C919 is yet to are blasting the tops off of mountain ranges to cre be seen However with 400 orders for the plane already ate space for new runways Suffice it to say that when booked (caveat-95 percent of the orders are from demand is that acute, in both the short and long term government-owned Chinese airlines) and with billions market share actions must be taken to meet the demand. n cash to continue investing in the project, Comac must be taken as a serious threat to become a major and intellectual property rights What other player in the commercial jetliner production business.information do you think is necessary for nvestigate before committing to do with a fim based in China? Questions for Consideration 1. One of the suppliers working with Comac to provide 3. Comac has decided to enter an extremely tive market with the C919. What global market str parts for the C919 is a company called Parker Hanni in, which is supplying hydraulic, fuel, and flight con- trol systems. Based on this information, what type of global market entry strategy do you believe Parker Hannifin is following with its efforts toward Comac? Support your conclusion do you recommend for Comac as it explores n the United States and Europe? That is, how w t position itself to gain onders agalinst Boeing and egy posblity of Airbus? 2. The case mentions a potential legal issue many Souce Scom GenoChin Get Rady for TkeFone1 companies have in doing business with Chinese ber 8301 companies-the potential for loss of trade secretsExplanation / Answer
1. Parker Hannifin should have effective supply chain method. Demand for assembly part should be fulfill by Parker Hannifin.
Thus the weight for plane is a major concern for Comac so Parker Hannifin should consider this point and Focus on weighing of parts during its manufacturing.
Parker Hannifin should develope a long lasting relationship approach with Comac.
As the part will be use for aircraft assembly so Parker Hannifin should focus on its quality control process.
2. what is the potential liabilites?
Check for the local industrial norms and government laws.
what is registration and licensing agreement requirement for export in china ?
Foreign exchange, local and import duties .
Chinese Labour law and dispute resolution.
3. Comac should define a short term and long term marketing strategy:
Define mission and vision strategy
Define a project plan with its end to end manufacturing schedule.
Comac should create its infrastructure according to aircraft demand.
Start the recruitment process for required staff.
Create a international distribution system.
Develope the policy and procedures.
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