{"id":389,"date":"2014-05-13T17:55:42","date_gmt":"2014-05-13T17:55:42","guid":{"rendered":"http:\/\/opentextbc.ca\/strategicmanagement\/?post_type=part&p=389"},"modified":"2019-07-02T23:04:58","modified_gmt":"2019-07-02T23:04:58","slug":"chapter-8","status":"publish","type":"part","link":"https:\/\/opentextbc.ca\/strategicmanagement\/part\/chapter-8\/","title":{"raw":"Chapter 8: Selecting Corporate-Level Strategies","rendered":"Chapter 8: Selecting Corporate-Level Strategies"},"content":{"raw":"
\r\n

Learning Objectives<\/p>\r\n\r\n<\/header>\r\n

\r\n\r\nAfter reading this chapter, you should be able to understand and answer the following questions:\r\n
    \r\n \t
  1. Why might a firm concentrate on a single industry?<\/li>\r\n \t
  2. What is vertical integration and what benefits can it provide?<\/li>\r\n \t
  3. What are the two types of diversification and when should they be used?<\/li>\r\n \t
  4. Why and how might a firm retrench or restructure?<\/li>\r\n \t
  5. What is portfolio planning and why is it useful?<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\n

    What\u2019s flying at Bombardier?<\/h2>\r\n[caption id=\"attachment_1533\" align=\"aligncenter\" width=\"400\"]\"Bombardier<\/a> Figure 8.1: Bombardier Ski-Doo[\/caption]\r\n\r\nWhen you think of Bombardier, you might\u00a0think of Ski-Doos and Sea-Doos. And you'd be partly right.\u00a0 But what did the company do in the thirty years between introduction of those two products?\r\n\r\nIn the 1920s and 1930s, travel on the snowy roads of rural Quebec\u00a0was a\u00a0by horse-drawn sleighs,\u00a0since there was little or no snow\u00a0plowing.\u00a0Fifteen-year-old\u00a0Joseph-Armand Bombardier, a skilled and avid mechanic,\u00a0built his first prototype snowmobile prototype, a small surface skimming contraption with a propeller.\u00a0By the mid-1930s,\u00a0he had developed the seven-passenger B7 \u201csnow vehicle,\u201d something we might now recognize as an early \"snow cat.\"\u00a0He followed\u00a0up with\u00a0a\u00a012-passenger B12 snowmobile and\u00a0a series of other snow-going vehicles for ambulance, freight transport, mail delivery, and school transportation.\u00a0Bombardier also developed a truck with interchangeable skis and wheels for Canada\u2019s lumber industry.\r\n\r\nAs we now know, a the new industry of snowmobiling was created.\u00a0By 1959,\u00a0the Ski-Doo was launched, now joined\u00a0by sister brands Lynx snowmobiles, ATVs, Sea-Doo watercraft, and Evinrude outboard engines. Looking forward, the Bombardier company\u00a0bought\u00a0a\u00a0manufacturer of motor scooters and trams, and its subsidiary, the engine manufacturer ROTAX, marked Bombardier\u2019s entry into the railway-car business.\r\n\r\nHowever, the 1970s brought one of the first oil crises to North America, where high petroleum prices resulted in\u00a0consumer demand for energy-efficient cars, and\u00a0sales of\u00a0Ski-Doos plummeted.\u00a0Bombardier cut its snowmobile production in half and redeployed its excess manufacturing capacity to build railway cars.\u00a0Bombardier was the successful bidder\u00a0to manufacture 423 cars for Montreal\u2019s subway system. Bombardier also purchased a majority stake in\u00a0a locomotive and diesel engine manufacturer in Montreal, adding LRC (light rapid comfortable) technology to its of rail transit expertise.\r\n\r\nBombardier diversified into the aerospace sector in\u00a0the 1980s through a series of purchases, including the de Havilland division of Boeing, based in Canada.\r\n\r\nThe economic boom of the late 1980s propelled the launch of the Sea-Doo watercraft and later launched the ATV, an all-terrain vehicle designed for two riders.\r\n\r\nAt the end of fiscal year 2013, Bombardier had revenues of $8.8 billion and an order backlog of $32.4 billion, a presence in 40 countries, and\u00a038,500 employees.\r\n\r\nWhen dealing with corporate-level strategy, executives seek answers to a key question: In what industry or industries should our firm compete? The executives in charge of a firm such as Bombardier Inc. must decide whether to remain within their present domains or venture into new ones. In Bombardier's case, the firm has expanded from its original business (transportation over snow) into railway transportation, aerospace, and several other industries. In contrast, many firms never expand beyond their initial choice of industry (Bombardier Inc., 2014).\r\n

    References<\/h1>\r\nBombardier Inc. (2014, February).\u00a0 Bombardier Transportation:\u00a0 Profit, Strategy and Market<\/em>.<\/a>\u00a0 Retrieved from http:\/\/ir.bombardier.com\/images\/ckeditor\/staging\/upload\/ckeditor\/files\/BT%20Profile%20Strategy%20and%20Market%20FEB%202014(1).pdf","rendered":"
    \n
    \n

    Learning Objectives<\/p>\n<\/header>\n

    \n

    After reading this chapter, you should be able to understand and answer the following questions:<\/p>\n

      \n
    1. Why might a firm concentrate on a single industry?<\/li>\n
    2. What is vertical integration and what benefits can it provide?<\/li>\n
    3. What are the two types of diversification and when should they be used?<\/li>\n
    4. Why and how might a firm retrench or restructure?<\/li>\n
    5. What is portfolio planning and why is it useful?<\/li>\n<\/ol>\n<\/div>\n<\/div>\n

      What\u2019s flying at Bombardier?<\/h2>\n
      \"Bombardier<\/a>
      Figure 8.1: Bombardier Ski-Doo<\/figcaption><\/figure>\n

      When you think of Bombardier, you might\u00a0think of Ski-Doos and Sea-Doos. And you’d be partly right.\u00a0 But what did the company do in the thirty years between introduction of those two products?<\/p>\n

      In the 1920s and 1930s, travel on the snowy roads of rural Quebec\u00a0was a\u00a0by horse-drawn sleighs,\u00a0since there was little or no snow\u00a0plowing.\u00a0Fifteen-year-old\u00a0Joseph-Armand Bombardier, a skilled and avid mechanic,\u00a0built his first prototype snowmobile prototype, a small surface skimming contraption with a propeller.\u00a0By the mid-1930s,\u00a0he had developed the seven-passenger B7 \u201csnow vehicle,\u201d something we might now recognize as an early “snow cat.”\u00a0He followed\u00a0up with\u00a0a\u00a012-passenger B12 snowmobile and\u00a0a series of other snow-going vehicles for ambulance, freight transport, mail delivery, and school transportation.\u00a0Bombardier also developed a truck with interchangeable skis and wheels for Canada\u2019s lumber industry.<\/p>\n

      As we now know, a the new industry of snowmobiling was created.\u00a0By 1959,\u00a0the Ski-Doo was launched, now joined\u00a0by sister brands Lynx snowmobiles, ATVs, Sea-Doo watercraft, and Evinrude outboard engines. Looking forward, the Bombardier company\u00a0bought\u00a0a\u00a0manufacturer of motor scooters and trams, and its subsidiary, the engine manufacturer ROTAX, marked Bombardier\u2019s entry into the railway-car business.<\/p>\n

      However, the 1970s brought one of the first oil crises to North America, where high petroleum prices resulted in\u00a0consumer demand for energy-efficient cars, and\u00a0sales of\u00a0Ski-Doos plummeted.\u00a0Bombardier cut its snowmobile production in half and redeployed its excess manufacturing capacity to build railway cars.\u00a0Bombardier was the successful bidder\u00a0to manufacture 423 cars for Montreal\u2019s subway system. Bombardier also purchased a majority stake in\u00a0a locomotive and diesel engine manufacturer in Montreal, adding LRC (light rapid comfortable) technology to its of rail transit expertise.<\/p>\n

      Bombardier diversified into the aerospace sector in\u00a0the 1980s through a series of purchases, including the de Havilland division of Boeing, based in Canada.<\/p>\n

      The economic boom of the late 1980s propelled the launch of the Sea-Doo watercraft and later launched the ATV, an all-terrain vehicle designed for two riders.<\/p>\n

      At the end of fiscal year 2013, Bombardier had revenues of $8.8 billion and an order backlog of $32.4 billion, a presence in 40 countries, and\u00a038,500 employees.<\/p>\n

      When dealing with corporate-level strategy, executives seek answers to a key question: In what industry or industries should our firm compete? The executives in charge of a firm such as Bombardier Inc. must decide whether to remain within their present domains or venture into new ones. In Bombardier’s case, the firm has expanded from its original business (transportation over snow) into railway transportation, aerospace, and several other industries. In contrast, many firms never expand beyond their initial choice of industry (Bombardier Inc., 2014).<\/p>\n

      References<\/h1>\n

      Bombardier Inc. (2014, February).\u00a0 Bombardier Transportation:\u00a0 Profit, Strategy and Market<\/em>.<\/a>\u00a0 Retrieved from http:\/\/ir.bombardier.com\/images\/ckeditor\/staging\/upload\/ckeditor\/files\/BT%20Profile%20Strategy%20and%20Market%20FEB%202014(1).pdf<\/p>\n

      Media Attributions<\/h2>