Research Proposal: Business Plan for Slow Wing Aircraft

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Business Plan for Slow Wing Aircraft

This business plan provides an environmental assessment of Brazil, and identifies major logistics and supply chain management issues associated with setting up a wholly owned subsidiary in Brazil. Recommendations concerning the best city to establish a manufacturing and supply chain operation to meet the long-term goals of the company are provided, as well as a high level logistics and supply chain management plan to support the location of Belo Horizonte recommended herein. Belo Horizonte is situated near several port cities including Santos and Tubarao (see map of Brazil at Appendix B) and is currently headquarters for aircraft manufacturer Aero Bravo, among others.

Today, Brazil is the fourth largest aircraft producer in the world (Fisher, 2002) and its economy is the largest in South America (Brazil, 2009). Notwithstanding the geographic distances involved between Brazil and the United States, the country is becoming an increasingly important exporter of goods of all types and is well situated to take advantage of new opportunities for establishing strategic alliances with companies in the United States. In spite of its attractiveness as a potential site for Slow Wing's secondary operations needs, there are some considerations that must be taken into account in order for such a venture to be successful. Although Brazil has enjoyed a good economic run, there is always the inherent risk of economic instabilities that may jeopardize even the most thoughtful approach to establishing these operations in another country. As Hoffman, Kamm, Frederick and Petry (1999) emphasize, "Multinational corporations considering doing business in Brazil must weigh the risks inherent in economic instability. Firms which decide to do business in Brazil generally have sufficient resources to commit long-term, with the flexibility to leave returns for future balance sheets" (p. 95). Furthermore, also a leading economy in South America, there are some important cross-cultural differences between the U.S. And Brazil that will affect the rate at which Slow Wing will be able to accomplish the formation of strategic alliances and supply chain needs envisioned by this initiative. In this regard, Hoffman and his associates emphasize, "Multinational corporations should not assume that the relative speed of transition which is typical for ventures in, and with firms in, the industrialized world will be the same when working in industrializing countries" (p. 95). Finally, Drake (2004) cites several examples of American firms seeking to establish operations in Brazil and concludes, "Doing business in Brazil is potentially costly and dangerous" (p. 1147). Therefore, Slow Wing's approach to establishing secondary operations in Brazil must proceed in a thoughtful and cautious manner, taking the following issues into consideration as the plan proceeds.

Supply Chain Plan

Availability and quality of suppliers. As noted in the executive summary, today, Brazil's economy is larger by far than the other countries of South American and is characterized by mature manufacturing and service sectors (Brazil, 2009). It is also the world's third-largest aircraft manufacturer (Fisher, 2002). Furthermore, Brazil's exports have been increasing for the past 15 years and are expected to continue to grow despite the current global economic downturn (Brazil, 2009). According to Reddy and Reddy (2001), many transportation-related manufacturers in Brazil are well experienced in providing customer-centric products that will be of value to Slow Wing. These authors report, "Firms have been shifting more manufacturing responsibility to their suppliers. For example, VW in Brazil has production facilities where the suppliers run the assembly line. Innovative steps like this can allow even a firm in the traditional manufacturing industries to be customer-centered" (p. 85). The geographic distances involved notwithstanding, Brazil enjoys modern port facilities and the availability and quality of the suppliers needed for the initiative envisioned herein are deemed sufficient for the company's needs (Brazil, 2009; Fisher, 2002).

Availability and Quality of Third-Party Service Providers. Brazil has more third-party service providers than any country in South or Central American today. For instance, there are currently 14 third-party service providers in Brazil, compared to five in Colombia, seven in Argentina, five in Chile, two in Bolivia, three each in Ecuador and Paraguay, four in Venezuela and one in Uruguay (Third party service providers, 2009).

Sourcing and Procurement Strategy. By contracting with local part suppliers and vendors for the company's other needs in its secondary operations in Brazil, the value-added aspects of the company's operations can be reaped while avoiding unnecessary warehousing and transportation charges. This aspect of the business plan is one of the most important to take into account. According to one authority on supply chain management, "As a factor in supply chain management, the combined entity of purchasing, procurement and sourcing is one of the most important. Indeed, supply management is the first area of focus for virtually every firm embarking on a supply chain effort" (Poirier, 2002, p. 43). As a company's supply chain matures to Level 3 and beyond (see Table 1 below), additional savings are typically realized through a combination of decreased transaction costs, identifying new sources for goods and services which may extend globally, though lowered transportation and logistics costs, the use of contract suppliers for various subassembly requirements as well as reduced inventory and carrying costs (Poirier, 2003).

To the extent that a Brazilian supplier's operations and corporate culture are consistent with Slow Wing's organizational goals and performance management approach will likely be the extent to which the sourcing and procurement function will be facilitated. In this regard, Poirier reports that, "Supply chain efforts progress through five levels in a sequence. As a firm moves through these levels, the various functions make progress or they restrict the overall effort" (p. 21). Table 1 below provides an overview of the major business applications concerning sourcing and procurement as defined by Poirier.

Table 1

Sourcing and Procurement in the Evolution of the Supply Chain

Progression/

Business Application

Levels 1 & 2

Internal Supply Chain Optimization

Level 3

External Network Formation

Level 4

Value Chain Constellation

Level 5

Full Network Connectivity

Supply Chain Optimization

Advanced Supply Chain Management

e-Commerce

e-Business

Design, Development Product/Service Introduction

Internal Only

Selected External Assistance

Collaborative Design -- Enterprise Integration and PIM-Linked CAD/CAM

Business Functional View -- Joint Design and Development

Purchase, Procurement, Sourcing

Leverage Business Unit Volume

Leverage Full Network through Aggregation

Key Supplier Assistance, Web-based Sourcing

Network Sourcing through Best Constituent

Source: Excerpted from Poirier at p. 22.

According to Poirier, most companies occupy the first, or beginning, level of supply chain evolution; however, as the firm's supply chain evolves into the higher levels, companies will begin to reap the economic benefits of using external resources to achieve their organizational goals. As Poirier emphasizes, "It is here that the external network formation begins, as the focus is on advanced supply chain management. The value chain constellation appears in Level 4, as current leaders display features of e-commerce, collaborate with allies in the digital economy, and apply cyber-based technologies in their relationships" (p. 22).

Planning and Forecasting Strategy. One authority on organizational decision making, Makridakis (1990), emphasizes that a comprehensive understanding of the principles of forecasting and decision making, together with a fundamental understanding of how and why past efforts have failed, will help companies of all types develop future-oriented decisions in planning and strategy. The process of planning and forecasting is based on the quality of information available, and Makridakis (1987) recommends the following:

1. To avoid biases in information acquisition it is necessary to sample "information from as wide a base as possible." To avoid accepting false forecasts in haste one should find "disconfirming" data and hypotheses.

2. As people are inefficient in aggregating information, this should be done mechanically.

3. To avoid false attributions of apparent causes ("illusion of control"), greater care needs to be exercised when interpreting the causes (p. 548).

Notwithstanding the foregoing Recommendations and the need for high quality information, Makridakis also suggests that in the context of forecasting and planning, simple methods of forecasting such as simple average of expert group opinion have frequently outperformed more sophisticated approaches (1987). There are several factors that must be taken into account in formulating an efficient planning and forecasting strategy that will be supportive of the proposed inventory management strategy (this is discussed further below). For instance, Boyson, Harrington and Corsi (2004) emphasize that, "In most supply chains today, uncertainty and/or a lack of current information causes organizations and their trading partners to accumulate inventory as insurance against potential service or fulfillment failures. One way to minimize such inventory buildups is to reduce uncertainty by improving the flow of information within an organization and between an organization and its extended enterprise supply chain partners" (p. 36). This enhanced ability to communicate in real-time is reflective of Levels 4 and 5 of the supply chain evolution process described in Table 1 above and would require Brazilian part suppliers and warehousing vendors that possessed the requisite computer-based telecommunications and inventory management software applications that would needed to maintain close contact as Slow Wing's inventory needs changed over time and to ensure that unnecessary buildups of inventory are not… [END OF PREVIEW]

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Business Plan for Slow Wing Aircraft.  (2009, April 28).  Retrieved July 22, 2019, from https://www.essaytown.com/subjects/paper/business-plan-slow-wing-aircraft/3513

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"Business Plan for Slow Wing Aircraft."  Essaytown.com.  April 28, 2009.  Accessed July 22, 2019.
https://www.essaytown.com/subjects/paper/business-plan-slow-wing-aircraft/3513.