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Brazil has a history of developing technology-based innovations of global magnitude. Although the sentiments grew when the focus was to create better war technology, altogether, Brazil grew in global influence leading to creation of commercial airline planes such as Embraer. As a means to increase security within Brazil, the economic stability measures increasingly pointed to negative impacts of import planes into Brazil and thus the manufacturing of Embraer was welcomed as a vital economic boost to the country’s economy. The plans to manufacture Embraer put into consideration science research and technology innovations particularly during the development stage of the aircraft spare parts and design related technologies.
The beginnings associated with the Brazilian aircraft manufacturer Embraer are humble to say the least. The aircraft maker rose from being a national pride to a formidable force in the aircraft manufacturing business due to advanced safety mechanism and clean record that increased investors and customers’ confidence and trust for the aircraft (Goldstein, 2001). Many researchers attribute the progress in the plane maker’s worldwide presence to the astuteness of the company’s management in testing the best management, innovative and development technologies.
Analysts claim that Latin America lacks a history of developing huge firms that can achieve worldwide market presence (Goldstein, 2001). However, Embraer is already an exception, being a respected international company with worldwide recognition for brand delivery besides having a local support from the government, although it is a private structured company.
Due to the innovation within the company in all areas pertaining to successful aircraft manufacturing ranging from top-notch manufacturing to strategic marketing to market Embraer brand all over the world, the plane maker are ranks third in the world of aircraft manufactures (Krishnan, 2003). The company is even more profitable than its Canadian rival Bombardier; whereby in 2010 Bombardier delivered 260 planes compared to 100 deliveries and order backlog of 250 for the Brazilian company (CAPA, 2011). The aircraft maker has already created a potential niche made an indelible mark in the aircraft manufacturing market, whose dominion was by companies established in the early twentieth century.
Production of the planes by the plane maker began in the seventies, with a bend on technological advancement (Goldstein, 2001). This was however, the first time the aircraft maker had taken a shot at the business. Earlier attempts had however failed, but this time the government was keen to succeed. In the earlier times, the business had failed due to the complication of the operational processes at the organization.
Functional harmonization of the operations at the organization was part of the survival reasons the aircraft achieved with this attempt. The earlier productions were cautious and relied heavily on imported spare parts that further affected the profitability of the investment (Krishnan, 2003). The new manufacturer was more receptive to assistance from multinational corporations except for a few Brazilian players. The private sector management experts were closely involved in creating ideal financial environment for the airplane manufacturing industries. Further, private technicians supplied services and component for the aircraft business.
The company was previously a public entity in Brazil, and its focus was mainly limited to national level. The government later privatized the company, which turned into one of the most profitable airplane brands in the world, even in markets saturated by old players like Boeing and Airbus that make the market impenetrable for new aircraft manufacturing companies.
State Owned Era
Embraer was initially a government project and had considerable government funding and subsidize (Goldstein, 2001). However, the burden of bureaucracy hampered the possible development the plane maker would have experienced. The company managed to command the local markets, but a different strategy was adopted to help the company venture into foreign markets. Political interference in the management of day-to-day production activities hindered the organization from taking off; to break even, Embraer was privatized. Extensive restructuring was necessary for the aircraft maker to make it to the next level in terms of profitability and global recognition.
The Precursor to Privatization
The company ran smoothly for most of the two decades following the launch of the production in 1970 (Goldstein, 2001). The nineties presented new challenges that needed fresh tactics if the plane maker was to remain relevant in the aircraft manufacturing business due to international credit crunch. Economic crisis in Brazil meant reduction in the profitability of major corporations and inevitable rise in the government stake in the plane maker’s shareholding, a situation the government was determined to take drastic measures to curb. The EMB-120, a thirty-passenger plane saw the Brazilian aircraft’s survival. The aircraft was able to get a majority share of the world’s share of the market for the type of the aircraft especially due to its low cost and high speed.
The stakeholders were mainly opposed to the idea of privatizing the aircraft maker when the government stated its intention to let the company go into the control of private management and control. Towards the end of the year 1994, a controlling interest to the organization was in private investors. In an effort to make sure, the company remained viable, the government made over half a million US dollars in investment into the company. Other policies the government imposed on the firm’s structure included a measure that foreign ownership could not exceed 40% (Goldstein, 2001). The processes of manufacture were revamped, capital outlay improved, and harmony between the different departments enhanced. Outsourcing led to increase in efficiency of the firm and was mainly in the non-critical processes of the organization such as maintenance and upkeep.
Embraer’s Success Strategy
Part of the aircraft manufacturer’s strategy involves meeting with the potential clientele and hearing what they would like to see in future designs of the company’s plane models (Dongyuan, 2011). The company then incorporates the suggestions in the designs it creates later on. The orientation towards the growing legion of international customers plays a major role in the kind of success the company enjoys globally.
The company is also collaborating with global partners such as the French in the promotion of some of its brands of planes in the world markets (Goldstein, 2001). The partnerships have increased the planes market presence and boosted the sales, even though the company imports most of its components from outside of the country. So far, the company has conquered the Chinese markets.
The Brazilian government played a major role in the success exhibited by Embraer. The government was more than supportive of the newly privatized company to help it solidify its international market share and conquer new frontiers in the aircraft business (Goldstein, 2001). Part of the government’s strategy was formation of strong alliances with strategic global partners.
According to the company’s top management, the planes produced by the company give the ultimate satisfaction to the customers (Dongyuan, 2011). The end-user orientation may explain why the planes have such a wide popularity among buyers of aircraft in many countries in the world, even where other plane makers originally dominated the markets.
Driven by Innovation
The major driver of the success of the aircraft maker according to the management of the company has been the relentless innovation efforts led by engineers and experts who oversee safety applications of technology. Top managers at the firm concur that the company is yet to make profits because of concentrating more on the technology innovation and development of part than on the marketing aspects of the planes (Krishnan, 2003). Despite the claims, it is clear why they may claim this stand. The government takes care of the business side of the company through international marketing strategies, leaving much of the management efforts to develop and improve on the aircrafts the company produces.
Privatization brought about new challenges whereby major stakeholders found themselves irrelevant in new structure of company, and this made them unsatisfied with the new company policy. The concerned parties tried to vie for greater control of the corporation in a court suit. The final ruling was in favor of the existing structure as long as it remained relevant to the initial intentions of the government and the initiators of the program.
Embraer has had a long and interesting journey, characterized with many challenges and setbacks (Ghemawat et al., 2000). Although most of the initial problems are non-existent, the company’s spirit of innovation remains true to the culture of new world innovation standards. The company has grown into a multinational corporation with clients all over the globe, in market initially unimaginable as impregnable to emerging aircraft manufacturers like Asia, China and France (Cassiolato et al., 2002). The culture of development, backed with genuine government support has made Embraer planes get in the top five list of global plane manufacturers, competing with companies that were well established before the beginning of the second world war