Strong government support created competitive advantages in the aircraft industry and led Embraer to become a global player. As a factor condition in the determination of national competitive advantage by Porter (Exhibit 1), the government established an environment where Embraer was able to procure raw materials easily through no tax or duty on imports.
To support Embraer’s business, related and supporting industries were developed by the Brazilian government setting aeronautics as a priority to grow the nation’s economy. The government tried to …show more content…
These initiatives helped Embraer start and continue to grow into a strong player in the aerospace industry.
Q3. Do you agree with Botelho’s decision to re-emphasize the military business? Does the French alliance make sense?
Botelho’s decision to re-emphasize the military business seems at odds with what has allowed Embraer to be successful. Firstly, the alliance would require Embraer to shift from being a “manufacturer” to “a supplier of intelligent defense systems”. It also seems to take the company in a new direction away from their core competency of being an integrator of complex aircrafts. The objective of the alliance was for Embraer to move beyond military aircraft into naval and ground defense. However, the industrial hubs within Brazil and the network of suppliers they currently have are all within the aerospace field. The diversification may not utilize many of the skills and resources they currently have. Therefore, there would be significant development costs. Lastly, the choice of the French alliance may also introduce potential conflicts. Though Embraer hopes to use the alliance to learn (i.e. reverse innovate) knowledge to move into manufacturing other military vehicles, the reverse could