PESTEL analysis for Embraer - Case Study Example

PESTEL analysis for Embraer Case Study Affiliation Embraer is an aircraft manufacturing company that started operations from 1969 as government facility. This Brazil-based aircraft manufacturer has experienced significant growth in the industry surpassing many aircraft manufacturers. The turnaround and growth of the former government company is often attributed to its privatization in 1994. Since this privatization, the company became profitable and competitive in the aircraft industry. This essay will perform a PESTEL analysis of this company to grasp the reason behind it success.

Emphasis will be placed on the Economic and Technology aspects that led to the growth. PESTEL is an acronym for the Political, Economic, Socio-cultural, Technological, Environmental and Legal factors that contribute to the growth or decline of an organization. Embraer is the quintessential example of the success of neoliberal privatization of a government company. The political and social factors, to some extent, contributed to the growth of this company. The political environment of Brazil, despite being poor, has had little to no effect to Embraer.

The privatization in 1994 excluded the government from the running of the company (Rothaermel, 2012). Similarly, the socio-cultural factors have had minimal contribution because this company does not focus on people. The company focuses on the building and selling of aircraft, which are bought by corporations and not bought by ordinary people. On the other hand, the economical and technological factors have contributed significantly to the prosperity of Embraer. Being based in Brazil, the company was at a unique position to benefit from the economic growth of the country (Rothaermel, 2012).

Brazil is a world economic giant, ranked seventh, and is considered as the fastest growing economy in the world. Furthermore, the country is the largest economy in Latin America. This growth in Brazil’s economy has led to fertile economic environment for Embraer’s growth. There is availability of development capital in the country that led to the growth of the company. The government is a significant shareholder in the company giving it vast economic resources for gain. The Brazilian government was very instrumental in the present success of Embraer.

After its inception, the Brazilian government gave the company license production contracts for the production of local aircraft. This contract was the catalyst for future growth because the company already had an available market (Rothaermel, 2012). The economical factors have had significant impact on the success of Embraer. However, the technological factors are the reason behind the growth and success of the brand. Embraer’s focus on technological innovation, in manufacturing aircraft, has led to the company gaining a competitive edge over its competitors (Rothaermel, 2012).

There are big players in the aircraft industry namely Boeing, Airbus, Bombardier, Gulfstream and Cessna. Embraer is often praised for its resilience and success in this industry (Rothaermel, 2012). First, Embraer concentrated in developing aircraft in the 70-120 seat market. There were little or no airplanes in this market. This specialization led to the creation of Embraer’s popular brands such as EMB 312 Tucano, EMB 120 Brasilia just to mention a few (Rothaermel, 2012).Other than the market specialization and segmentation strategy, the company has also embraced sustainable practices.

These sustainable practices include the utilization of bio-fuels in its aircraft. Embraer was among the first aircraft manufacturers to adopt bio-fuels in their design of aircrafts (Rothaermel, 2012). Furthermore, the R&D sections in the company have industry standards in bio-fuel and sustainability research. The Ipanema crop duster, in 2002, was the first aircraft to operate fully on bio-fuel. The development of efficient engines in their aircraft is also part of their sustainability campaigns.

The E-jets family is their flagship aircraft that utilize efficient engines that have large diameter fans (Rothaermel, 2012). In conclusion, Embraer aircraft manufacturing company will remain competitive in the future. Their efforts in embracing technology will be the contributing factor in future growth. The sky is the limit for this company. ReferenceRothaermel, F. (2012). Strategic Management: Concepts and Cases (First). McGraw-Hill.