Cambridge Aerospace - Cambridge MBA Weblog · PDF filemacro analysis tool for the Aerospace industry’ Source: adapted PESTEL model (Johnson et al, 2006, p54) F.E Pest, Michael Duignan,

Cambridge Aerospace

Missile Consultancy

Copyright© Missile Consultancy 2008

Missile Consultants

Names Roles

Ibrahim Koeycue Global Strategy Planning

Consultant

Michael Duignan Macro Environmental Analyst

Stéphanie Masschelein Micro Strategy Consultant

Sandra Selmanovic Operations Consultant

Lewis Walsh Business Development

Consultant

Mariann Raboczki Market Analyst


Globalisation Influences

Ibrahim Koeycue


YIP, G.S., 1995. Total Global Strategy


Global

Strategies

Climate

Change

Global

Competition

Cost

Advantage

Several new regulations

and laws

Cambridge Aerospace

has created a new

committee

Responsible for its

environment

Government

influences

Climate Change



Global

Strategies

Climate

Change

Global

Competition

Cost

Advantage

Government

influences

Fewer influences from UK

government

Exchange rates

Barríers on trade

Government Influences



Global

Strategies

Climate

Change

Global

Competition

Cost

Advantage

Government

influences

Very high competition

Increasing number of

competitors worldwide

Global economic

turbulence

Global Competition



Global

Strategies

Climate

Change

Global

Competition

Cost

Advantage

Government

influences

Fast changing

Technology

High development costs

Global economic

turbulence

Cost Advantages



PEST – PESTEL – F.E-Pest Analysis

a macro-environmental analysis…

Michael Duignan


Aerospace macro-environment

The Global Aerospace Industry can be defined as 3 main areas;

Commercial Aviation

Military Contracts and Worldwide Defence

Space Exploration


http://images.google.co.uk/imgres?imgurl=http://www.aiaa.org/events/SpaceExp/NASA_Logo.gif&imgrefurl=http://www.aiaa.org/content.cfm%3Fpageid%3D230%26lumeetingid%3D1989%26viewcon%3Dother828%26id%3D828&usg=__d58vU_xn2CRFRWxnPnHW2XQ9wN0=&h=857&w=1005&sz=44&hl=en&start=309&um=1&tbnid=m0YhM3vHjtBOYM:&tbnh=127&tbnw=149&prev=/images%3Fq%3Dspace%2Bexploration%26start%3D306%26ndsp%3D18%26um%3D1%26hl%3Den%26sa%3DN

Adapted PEST model F.E-Pest – ‘a new

macro analysis tool for the Aerospace industry’

Source: adapted PESTEL model (Johnson et al, 2006, p54) F.E Pest, Michael Duignan, 2008


© M .Duignan 2008

F.E-Pest – Political Issues… © M .Duignan 2008


Political Issues;

•Governmental Policy: Doubling Air

Passenger Tax 2006

•Increasing World Military and Defence

Budgets (US, China and Russia)

International Military Budget Statistics…

World Military

Spending, 2008

US Military

Spending

2001 - 2008

PRC Defence

Expediture

1996 - 2007


F.E-Pest – Environmental, Social and

Technological Issues…


Environmental, Social and

Technological Issues

•Worldwide concern for increasing

carbon Emissions within aviation

•Research and Development needed

within the field of reducing carbon

emissions

•Social response to increasing carbon

emissions

© M .Duignan 2008

F.E-Pest – Economic Issues…


Economic Issues;

•‘Credit Crunch’; The Financial Crisis 2007

and beyond

•Volatile Oil Prices

F.E-Pest – Future Issues and Questions…


Future Issues and Questions;

• How much further will the credit crunch

further damage both Aerospace and

Aviation worldwide?

•In regards to International defence, are

there any forming hostilities around the

world? e.g. terrorist attacks

• Are there any bill trying to be passed

through the government regarding carbon

emissions leading to further governmental

pressures? © M .Duignan 2008

Recommendations…


Collaboration between other Aerospace companies both in the

UK and worldwide in times of economic recession and

financial crisis

Invest highly in research and development and technological

advancements regarding carbon emissions

Penetrate countries with subsidiary companies of Cambridge

Aerospace to benefit from large numbers of military contracts

(cash cow)

Porter’s 5 Competitive Forces

Stéphanie Masschelein


Industry Competition

RAF Airlift business unit : no

competitor ; BUT if extension

of the support to other aircraft,

several competitors :

- Airbus/Boeing

- BAE

- Systems FRA

- Thales

- SERCO

- VT

Market share in UK = 15%

and no opportunity for growth

Source : M.E. Porter, Competitive Strategy: Techniques for

Analysing Industries and Competitors, Free Press, 1980.


Suppliers/Partners

Several suppliers of CA in this BU :

UK MoD

Rolls Royce (UK)

Lockeed Martin (UK)

ADAT (UAE)

FSS (Canada)

Babcock Defence (UK)

Low to high power

Low to high switching costs

GLOBALIZATION




Buyers/Customers

UK MoD/RAF

Importance of « partnered

solutions » between MoD and

the industry

High power

because MoD is the only

customer, its power is

huge

Low switching cost

It is not expensive for the

MoD to change supplier




New entrants

Main threats are :

Middle East

Russia

China

India

High threat

They represent a high threat

but not in the short term

Source : M.E. Porter, Competitive Strategy: Techniques for Analysing Industries and Competitors, Free Press, 1980.


Substitutes

It is a capability driven market

and not a technology driven

(importance of experience and

approvals on aircraft type)

BUT need of a continuous

improvment

Low threat

in the short term because the

experience increase with the time

DIGITALIZATION



Other forces ?

Environmental force

Obligation to develop

sustainable aircraft

Technological force

CA has to develop new

technologies for answering

to the environmental need

Economic force

Financial crisis has an

influence on aerospace

industry, even if it is low



Balanced Scorecard

Sandra Selmanovic


Cambridge Aerospace Vision & Mission

Vision:

To build on our history to

grow a set of sustainable,

geographically diverse

engineering and aviation

related businesses,

strategically aligned,

delivering best in class

support, service and

solutions to Civil, Military

and OEM Customers across

world markets and to be the

partner of first choice.

Mission:

To provide our customers

with innovation,

responsiveness and best

value through delivery of

integrated operational

support, technology services

and people services

Source: Cambridge Aerospace Internal Documentation


Cambridge Aerospace RAF Airlift

C-130 Hercules (HI) L-1011 TriStar (TRI)

Customer: Ministry of Defence (MoD)

Integrated Project Teams (IPT)


RAF Airlift Strategic Guidelines

Diversify beyond traditional C-130 business

Transform the business from being engineering-led to

business performance led, by embedding a culture of

output-based performance

Deliver projects to quality, cost and timeliness targets

Source: Marshall Aerospace Internal Documentation


RAF Airlift Balanced Scorecard (I) company‘s own scorecard

Objectives Targets Measures Initiatives

Cu

sto

mer

Become preferred

Tristar service

provider to MoD

Secure TRI and

then engines and

accessories

contract

TRI contract award

in Nov 08

Seek view on

engine support

options

Become MoD’s

Preferred choice

for non-HI C130

work

Frequent visits to

senior

management

Attend Stakeholder

Reviews and other

MoD forums

Explore options for

making this

attractive to IPT

Establish open and

mutually beneficial

relationships at all

levels of MoD

All senior MoD

staff to be relaxed

about MA winning

more work and

confident in our

abilities

Visit Air Cmd and

DEC twice per year

to cement wide

relationships

Ensure CA always

delivers on its

commitments



RAF Airlift BSC (II) company‘s own scorecard


Fin

an

cia

l

Increase Revenue Win more work

Perform to 09

budget, which

includes additional

activity

Increase ease of

contracting and

openness

Increase success

rate of Sales

Enquiries

Win a greater % of

work bid

Exceed current rate

of 75%

Source: Marshall Aerospace Internal Documentation


RAF Airlift BSC (III) company‘s own scorecard


Inte

rnal B

usin

ess

Pro

cesses

Develop

successful TR

processes

To have a complete

set of processes,

which support the

achievement of

contract performance

measures

Transition being

completed by

October 09

KPIs being met at

point transition

period ends

Define staffing

and recruit

Provide training,

supervision and

incentives where

suitable,

Learn

ing

&

Gro

wth

Drive change

through the

business to

improve IPT

perception of

performance

To continue to

enhance performance

By 2010 have

improved scores

and impression

Ensure CA always

delivers on its

commitments



Company balanced scorecard

critique

The company BSC is surprisingly qualitative.

This company is missing the basic purpose

of the balanced scorecard –

quantitative KPIs

quantitative objectives and targets

Where are the important numbers?



Revised RAF Airlift BSC (I) our version has KPIs (key numbers)

Perspective Objective KPI Target Initiatives

Become preferred Tristar

service provider to MoD

Percentage of the total

MoD expenditure for

TRIOS

2% of the total MoD

Expenditure per year

Seek IPT view on engine

support options as discussed

pre-TRIOS

Become MoD’s Prefered

choice for non-HIOS C-

130 work

Number of visits to IPT

senior management

2 visits per year Frequent visits to IPT Senior

Management Explore options

for making this attractive to IPT

Establish open and

mutually beneficial

relationships at all levels

of MoD through

completing work on time

and within budget

Percentage of projects

delivered on time and

within budget

100% of deliveries

completed on time and

within budget

Create central Project Office

Increase customer

satisfaction

Number of customer

complaints

Customer complaints = 0 Run customer satisfaction

surveys, quality circles, develop

and implement comprehensive

CRM

Percentage of

implemented changes

requested by customer

100% of changes

requested implemented

Promote diversification to

meet customer needs on

a broader basis

Percentage of R&D

dedicated to develop

new products and

services

30% of R&D

Cu

sto

me

r


Revised RAF Airlift BSC (II)


Develop successful

TRIOS processes

through completing

transition on time

Percentage of monthly

transition completion

5% completed per month

(Transition being

completed by October

09)

Complete sub-processes

on time

Timeliness of procedures 100% of sub-processes

completed on time

Better forecasting, efficiency

circles

Drive change through

training and commitment

of staff

Percentage of staff

trained per quarter

15% of staff trained per

quarter

Provide training, supervision

and incentives where suitable

Ensure staff well-being Number of sickness days

per quarter

To be defined according

to current trends and

industry benchmarking

To be assessed

Inte

rna

l Bu

sin

es

s

Pro

ce

ss

es

Le

arn

ing

&

Gro

wth


Revised RAF Airlift BSC (III)


Increase Revenue Annual revenue Revenue equal to 09

budget, which includes

additional activities

Increase ease of contracting

and openness

Increase success rate of

Sales Enquiries

% of successful work bid Exceed current rate of

75%

Improve information flows

about competitors, conduct

extensive research on

competitorsCut costs % of annual cost-

decrease

Decrease costs by 2%

annually

Promote innovation and

efficiency, lean management,

enhance logistics

Increase ROI ROI ROI minimum 15% To be assessed

Fin

an

ce


Recommendations from the revised

Balanced Scorecard

Identify strategic objectives, which reflect mission &

vision and establish strategy map, quantitative KPIs

and target values on top-level

Cascade down KPIs to business unit level and provide

guidance in implementation process; ensure

commitment through active involvement of all parties

Review process regularly and prioritize initiatives


Miller’s Reasons To Diversify

Lewis Walsh


Diversification


Balance Cash Flows – Boston Matrix


Extend Competencies


Strategy Clock


Increase Market Power – New

Geographical Location


Recommendations


Miller‘s Reasons for Diversification

and the Ansoff Matrix

We will now look at two major aspects of diversification:

the reasons / motivations (based on Miller)

and the strategy options (based on Ansoff)


Miller Motivations Vs Ansoff Matrix


Ansoff’s Matrix

Mariann Raboczki


Source:

Adapted from H.Ansoff,Corporate Strategy,Penguin,1988,Chapter 6.


Business Units

Based on the 9 business units on the

Cambridge Aerospace website


Cambridge

Aerospace

Aerospace

Solutions

Business

Aviation

48

Ansoff Developmental Alternatives

Existing Core Business

„Sticking with their knitting”

Civil&Military Aircraft

RAF Airlift

Aerostructures

Aerospace Solutions

Manufacturing

New

M

A

R

K

E

T

Existing New

PRODUCT/SERVICE

Long-term arrangements with

military customers

Partnership

Lockheed Martin,BAe

Systems,Airbus, Corus,

Alenia Marconi,CAV

Aerospace,Boeing, and BAe

Systems,Land Systems

Source:



HI contract (RAF C-130

Hercules fleet 2030)

Contract by UK MoD for

(RAF Tristar fleet 2015)

Contract with Boeing Integrated

Defence Systems (IDS) for the

design and manufacture of the

Auxiliary Fuel System (AFS) for

the Multi Mission Maritime

Aircraft (MMA)


Existing

New Market Development

Civil&Military Aircraft

RAF Airlift

Aerostructures

Aeropeople

Test Services

Business Aviation

Cambridge City Airport

Marshall Solutions

Manufacturing

Existing New

Opportunity

European economy

Poland,Romania

expanding overseas

Source:



PRODUCT/SERVICE

M

A

R

K

E

T


Existing Product Development

RAF Airlift

Aerostructures

Test Services

Aerospace Solutions

Manufacturing

New

M

A

R

K

E

T

Existing New

PRODUCT/SERVICE

Source:



Tristar package

Products are developed by

cost and weight efficiency

(light HondaJet)

Risk reduction for the new

Europrop International

TP400-D6 Turboprop engine

Create, develop&expand new

products, services and

manufacturing processes


Existing

New Diversification

Miller’s Strategy

Existing New

Source:



PRODUCT/SERVICE

M

A

R

K

E

T

Any questions?

Thank you for your attention!


Documents

Cambridge Aerospace - Cambridge MBA Weblog · PDF filemacro analysis tool for the Aerospace industry’ Source: adapted PESTEL model (Johnson et al, 2006, p54) F.E Pest, Michael Duignan,