Civilian Aerospace industry in GermanyIntroductionAerospace industry is involved in manufacturing and services of aircrafts, aircraft systems and components; spacecraft, avionics and other related electronics and ground based infrastructures, which support the operations of spacecrafts and aircrafts. In Germany, aerospace industry is one of the most innovative and best performing industries (Abrams and Kleiner, 2003). It is predicted that in the coming twenty years there will be over 25,000 new aircrafts going into service to meet global demand (Fojt, 2006). The availability of both civil and military aircraft manufacturers in Germany presents an opportunity for investors in the industry (Baker & Hart, 2007).
Manufacturers of aircraft in Germany are striving to comply with the vision 2020 through seeking new technologies and solutions to reduce emissions and noise while increasing capacity at the same time. The industry has been recording an average annual growth rate of 9% since the mid 1990s and recorded a EUR 20.2 billion in turnover in 2007. The Germany aerospace industry has over 88,000 highly skilled work force and over 155 companies and related institutions. Germany offers incentives for all investors in aerospace industry in terms of cash, labor, research, and development in spite of the country origin of the company.
Out of the annual revenues, 15-20% is dedicated to research and development (Petrick, 2007). This report provides an analysis for civilian aerospace industry in Germany and provides advice for selection of the most appropriate form of market entry that can be used by Meggitt plc to enter Germany aerospace industry. Meggitt plcThis is a leading British based engineering business, which specializes in aerospace equipment. It is headquartered in Bournemouth Airport in Dorset (Belobaba, Odoni, and Barnhart, 2009).
The company provides aircraft braking systems, polymer solutions, fluid controls, theatric, thermal systems, safety system and Meggitt sensors and controls. The business derives its support from an evolving group infrastructure with strong functional leaders (Hirschel, Prem and Madelung, 2004). Thus the firm is able to combine talents, technologies, share services, and benefits from a range of centrally managed initiatives (McGuire, Fai, and Ozaki, 2010). The efficiency of operations at the firm is boosted by IT, strategic sourcing and low cost manufacturing (Fojt, 2006).
The group has a high performance culture, which underpins the safe operations for its employees, a tenacious ethics program, and pervasive export compliance process (Delfmann, 2005). Porter’s DiamondFactor conditionsThe success of UK in aerospace market stems from investment in research and development. This has stimulated innovation and knowledge creation (Forsyth, 2005). It also supports research in universities and this has had spin off benefits into non-aerospace activities (Achrol and Stern, 1988). This investment continues to enable UK aerospace industry to attain sustained productivity growth and competitiveness (Capon, 2008).
Research shows that investment in aerospace industry research and development in UK is only second to pharmaceutical (Beekun et al. 2008). It is estimated that the UK aerospace sector invests more than £2.5 billion in research and development each year. The growth in the sector stands at 5% currently. The aerospace industry of UK conducts 12.5% of all the research and development carried out in UK. Most of this works is heavily funded by the industry itself to the tune of £3 billion per year. Thus Meggitt plc has gained initial competitive advantage from which it can build on when it enters German market.
The innovative work force found in UK can be utilized by Meggitt to initially establish itself in Germany with the help of the skills, which are available in Germany.