Abstract

Brazil-based Embraer was the fourth largest aircraft manufacturer in the world behind Airbus, Boeing, and Bombardier Aerospace. Embraer was set up as a government company in 1969, and privatized in 1994. This case examines Embraer's turnaround and growth after its privatization. It discusses the steps taken by Mauricio Botelho (who became the CEO after the privatization) to return the company to profitability, as well his handling of various strategic and human resource issues during and after the turnaround. The case then explores Embraer's entry into the regional jet market, where it had to compete against Canadian aircraft major Bombardier. It also talks about Embraer's use of international strategic alliances to gain expertise in aircraft manufacture, and its aggressive marketing of its new regional jets to various airlines. A section of the case discusses the various facets of Embraer's competition with Bombardier in the regional passenger jet market. The implications of the dispute between the two companies - which went before the WTO - and its impact on the political and economic relations between their home countries are also mentioned. The rest of the case includes a commentary on Embraer's future prospects, where issues like airline scope clauses, the resurgence of turboprops in the early 2000s, Embraer's problems with its E-Jets, and the company's excessive dependence on revenues from the export of passenger jets are discussed. The case ends with a description of Embraer's restructuring efforts in early 2006, including the company's new capital structure.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Examine and understand the issues involved in the turnaround of a company
• Understand the differences in the business environments of developing and developed countries
• Analyze the competitive advantages and disadvantages of an aircraft manufacturer based in a developing country
• Understand the strategies adopted by a company based in a developing country to compete in a highly volatile global market
• Examine the impact of a successful company on the economic development in its home country

Keywords

Empresa Brasileira de Aeronáutica S.A, Embraer, Brazil, Aircraft manufacturer, Aerospace industry, Regional jets, Bombardier, Mauricio Botelho, Bonazo Group, Turnaround, E-Jets, Strategic alliances, Microjets, Boeing, Airbus