Question 2

Mitsubishi Aircraft set for first passenger jet test flight

Japan is home to some of the world's biggest automakers and shipmakers, and its trains run on subways and high-speed tracks around the globe. One industry Japan hasn't been able to penetrate is construction of passenger jets. Mitsubishi Aircraft aimed to change that with Japan's first new passenger plane in more than four decades. Mitsubishi Aircraft is a partnership between industrial giants Mitsubishi Heavy Industries and Toyota Motor Corporation with design assistance provided by Toyota's affiliate, Fuji Heavy Industries, which is already an aircraft manufacturer.

The Mitsubishi Regional Jet (MRJ) will make its debut flight in mid-October 2015. Mitsubishi Aircraft wants to break the virtual lock that Embraer SA and Bombardier Inc have on the market for small passenger jets by eventually taking a 50 percent share of the market. The 92-seat MRJ90 sells at a list price of US$47.3 million which is relatively high compared with rivals. However,

"This battle is going to get nasty," Addison Schonland, an aviation consultant said "Embraer and Bombardier are not going to give up the fight. We don't know if there's room for three players. The pie's not getting bigger."

Mitsubishi Aircraft has entered into a strategic alliance with Boeing (world's leading aircraft manufacturer for large commercial jets) under which the Chicago-based aircraft maker will help with marketing, development and post-sales activities. It has also opened an engineering centre in Seattle which will employ 150 engineers, including about 50 sent from Japan, to access professional expertise on aircraft development and speed production of the MRJ.

Mitsubishi Aircraft has also opened sales centres in the US and Europe. So far, the company has won 407 orders for the MRJ, including 184 options and purchase rights. The jetmaker "could have a really good plan if they can mass-produce it and keep costs down", said Edwin Merner, president of Atlantis Investment Research Corp in Tokyo. "They have the competency to do it and if the plane is good, they have a good chance of succeeding."

(Adapted for academic purposes. Mitsubishi Aircraft set for first passenger jet test flight, The Business Times, 9 September 2015, page 20)

(a) "Mitsubishi Aircraft wants to break the virtual lock that Embraer SA and Bombardier Inc have on the market for small passenger jets by eventually taking a 50 percent share of the market."

Based on the abovementioned statement, discuss the competitive strategy and competitive position that Mitsubishi Aircraft is adopting in regard to entering the small passenger jets market. Proposeone (1)appropriate competitive strategy that Mitsubishi Aircraft should adopt based on the competitive position. (8 marks)

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