Marketing Strategy for Higher Planes, Inc.
Background
Higher Planes Inc. is a growing but high liability business, which manufactures ultralight aircrafts in a remote rural area of Kansas. The design and technology owned by the company is Mitchell Wing, which has a solid and reliable history on the ultralight aircraft market from its establishment. While marketing of the airframe and undercapitalization have been successfully addressed by an owner, Ed Peden, recent liability issues have made him to reconsider potential options for business development, including potential sale of the business. This paper suggests a marketing plan as an alternative for business sale based on the case presented (Cameron & Glass, 1995) and current state of business in the ultralight aircraft industry.
Market Overview
The market of ultralight aircrafts has a long story of product liability issues coming from the fact that no organization maintains reliable records of ultraflight accidents, while neither carries product insurance due to the price incompetitiveness (Cameron & Glass, 1995). As a consequence, releasing another kit for assembling an aircraft, as well as selling an assembled one brings for reputational risks for the manufacturer with another potential lawsuit, or aircraft malfunctioning. While Higher Planes, Inc. keeps protecting itself by cooperating with clients having previous ultralight experience, providing extensive training based on the inherited methodology of owners, as well as excluding engines from the final composition sold to the end client, they are still keeping responsibility for assembling process as well as materials used in kits. One way or another, the responsibility could not be completely shifted over the shoulders of end clients, thus Higher Planes is likely to switch towards the kit plane industry realities described by Sontag (1994) and later confirmed by Gardner & McSharry (2005). Following this shift, company is likely to face additional challenges, like relationships with suppliers and their increased bargaining power. However, considering the strong record of safe raw material utilization, FAA certification availability, as well as proposals from external markets on selling overseas, Higher Planes is likely to gain additional market share through employment of transnational strategy elements.
Overview of Transnational Strategy Elements
The nature of transnational strategy is in pursuing a balance of centralization of main activities that raise value from firms’ products and services, and decentralization of other activities that will require either outsourcing or global adaptation (Lovas & Ghoshal, 2000). While pursuing transnational approach, Ed Peden should concern himself with “exploiting scale economies by sourcing from a reduced set of global suppliers and concentrating the production of offerings in relatively few locations where competitive advantage can be maximized” (Boscor and Bratucu, 2009, p. 56). Another consideration is that production and marketing should be organized globally, thus maintaining a strict monitoring of process flexibility on the local level. In transnational scenario, companies attempt to combine global efficiencies with local advantages, thus benefitting from global and multi-domestic approach at the same time (Diaconu, 2012). Consequently, transnational companies do not centralize or decentralize authority, but instead empower …
