International

Business
ISU

Name: George Pan

Due Date: January 11, 2008

Teacher: Mrs. Nunes
International Business ISU George Pan

Class: International Business

Code: IBB4M1-01
Table of Contents

Current and Future Problems ………………………………………………2

Russia………………………...……………………………………………….2

Aeroflot ……………………………………………………………………….3

Bombardier……………………………………………………………………4

Rationale for Export………………………………………………………….5

Implementation……………………………………………………………….5

Domestic Benefits……………………………………………………………6

Bibliography…………………………………………………………………..8

Appendix……………………………………………………………………...9

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International Business ISU George Pan

Current and Future Problems See appendix 1

Currently, Russia is facing severe environmental problems. Due to the

chaotic mess left by the economic downfall of the Soviet Union, many old

factories are outdated in terms of technology and are polluting the environment

heavily. This is largely due to the fact most of these plants burn coal and this

process creates thick fumes that are concentrated with greenhouse gas. Also,

there’s been a lot of misuse of agricultural chemicals that has led to soil erosion

and contamination in the water and air.

Now focusing on the aerospace sector Russia, the sector is also causing a

lot of damage environmentally. In addition to the massive amount of greenhouse

gas emitted after consuming so much jet fuel, Russian airplanes also pollutes the

air with noise. The European Union recently has passed an act a couple of

months ago banning nearly 80% of Russian planes from entering European

airspace. With this act passed, Russia will be damaged economically greatly as

the industry is already short of money for technological upgrades.

If the problem of severe pollution is not solved, serious social and

economic problems will arise in Russia to further cripple its economy.

Russia See appendix 2

With the largest territory among nations, Russia has at its disposal vast

amount of resources. Situated in Eastern Europe and Northern Asia, it is truly a

continental nation. With a population of 141,377,752, the country offers a largest

market and numerous opportunities to businessmen.

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Even though a democratic government has replaced its authoritarian

communist government decades ago, hints of state control can still be seen.

Democracy has not yet truly matured in Russia.

Since its geographic location and climate is very similar to that of

Canada’s, it is very easy for us to imagine what the Russian weather is like.

Therefore, when we Canadians have advantage when we want to export our

goods and services to Russia.

There is however a very big problem in this country that would be hard to

deal with. That is the Russian mobsters, an interview with Arthur Goldstein tells

us failure to comply with the mafia would lead to very violent ends. So when

businessmen try to expand to Russia, this is one thing they must be very

cautious about.

Aeroflot See appendix 3

Aeroflot is the national and the largest airline in Russia with history

stretching back all the way to 1923. As one of the world’s most recognizable

airlines, it has a fleet of 88 planes.

The fleet is however far behind in technology when compared to other

airlines. Planes such as the Tu-154, Il-86, Tu-134, and DC-10-30F are extremely

outdated, with some first produced in the 60s and 70s. The airlines do have

some new planes but the small number have little effects on the overall general

impression of the company. These old planes also very damaging to the

environment as their old designs are not built to be eco-friendly.

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The service offered by Aeroflot is also unsatisfactory as mine interview

with a former customer Narayanan Kidambi pointed out. He was greatly

disappointed and said to never travel with the airlines again.

This is a grave issue since if this trend continues; Aeroflot could lose a lot

of money. Therefore Aeroflot must act in order to stop the company from doing

even worse.

Bombardier See appendix 4

Bombardier Aerospace is the largest aircraft manufacturing company in

Canada. A subsidiary of Bombardier Inc, the aerospace division produces all

sorts of business jets and jet liners and currently owns one third of the world’s

business jet market.

Currently, the company has developed another series of planes called the

CS series. There are currently two classes which are the C110 and the C130.

Both turns out to be slick looking, modern, up-to-date airplanes that is full of

luxury. It has a great physical appearance and is clearly a good jet. But that’s not

all; it also is good on the specifications.

Its range is impressive, it can carry more than 100 people, it consumes

less fuel than the average plane of its size and it emits less greenhouse gas. This

is all thanks to the lighter alloy that is used to build the fuselage. Matthew

Baruvier was kind enough to give me this piece of information. This lighter alloy

is also used on the new Boeing 787 and Airbus A380.

With this new plane at its disposal, Bombardier would have no trouble

finding customers to fill their needs with this cheap and eco-friendly plane.

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Rationale for Export

There are several reasons why this class of planes should be exported to

Russia’s Aeroflot. It is to help Aeroflot update its current fleet and to make their

planes less polluting.

Even though mafia involvements were said to be a problem earlier, it

would matter very little here. That is because Aeroflot is partly owned by the

government of Russia and no mobster dares to take on the government.

Bombardier doesn’t even have to worry about doing anything in Russia because

by the time the plane is there, the ownership has already changed.

Also another reason why is because currently, the fleet is extremely

unfriendly towards the environment. Nowadays there is a lot of awareness of

what is going on with our environment and everyone knows that if we keep

polluting our planet, there would be grave and dire consequences. Some of its

effects have already shown itself as global warming brought more storms, more

unstable conditions, and more damage to natural habitats. Therefore we can’t

just watch Russia’s airlines destroy the environment, it is our world too and we

must act upon this.

Lastly, since Russia and Canada are both up north, they share similar

climates. This is important since Canada can understand how cold it can get and

so Canadians can build a plane that could withstand the cold and be reliable

even if the temperature is very low. This similarity would give us an edge as this

understanding is not something that can be just acquired.

Implementation

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Implementing this plan is actually quite easy. No outsourcing will be

required since Bombardier has numerous plants in Canada to produce its planes.

First, Bombardier will have to order all the metals and steel from China as China

is rich in those minerals and sells them at a low price. Another way is to buy

metal and steel from Russia since they like China, is also rich ores.

Then, the plane will be assembled in Canada. Once this is done, the

paperwork will begin. Aeroflot should purchase as many of these planes as

possible to use them as their new medium range passenger planes. The price of

each will be $50 million or more depending on the engine wanted, extra features,

different seating plans, etc. After all the paperwork is worked out, the planes will

be tested in a test flight before the actual transporting can begin.

Getting the plane to Aeroflot will not be so hard. First the planes will fly

north over the North Pole and land in an airport in Siberia. It will then refuel and

then take off again to whatever an Aeroflot airfield to be prepared. It is that

simple. Since it can transport itself, numerous logistics issues have been solved.

Domestic Benefits

When this plan is fully implemented, there will be numerous benefits

experienced domestically by Canadians. First, Bombardier Inc will of course reap

most of the benefit. With the orders from Aeroflot, Bombardier will be able to earn

a lot of money. In effect, the Canadian population will enjoy this as a richer

Bombardier will hire more workers thus decreasing unemployment. In addition,

this surge of activity will be greatly beneficial to the Canadian economy. Increase

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International Business ISU George Pan

in export with a decrease in unemployment will mean our economy will

experience expansion which is good for everybody.

Lastly, by selling Russia more eco-friendly planes, we will be able to live in

a healthier planet. We after all live on the same planet and if one nation is

polluting it severely, we are not immune from it. If we don’t help that nation to

revert its ways, we will sooner or later suffer the consequences.

Therefore, with so many economical, social, and environmental benefits,

this plan should very much be implanted as a lot of good will come out of it in the

end.

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Bibliography

• Aeroflot, Russian Airlines. Aeroflot-AirFleet. 2002

<http://www.aeroflot.ru/eng/company.asp?ob_no=741>

• Aeroflot, Russian Airlines. Company Info. 2002

<http://www.aeroflot.ru/eng/company.asp?ob_no=739>

• Bombardier. CSeries.2007
<http://www.bombardier.com/index.jsp?id=3_0&lang=en&file=/en/3_0/3_0.jsp>

• Carmine, Tom. Russia faces airspace ban. FindArticles at BNet. 6 Feb. 2007
<http://findarticles.com/p/articles/mi_m0CWU/is_2007_Feb_6/ai_82563178>

• US Central Intelligence Agency. The World Factbook-Russia. 13 Dec. 2007.

<https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html>

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Appendix
1) https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html

Environment - current issues:

Air pollution from heavy industry, emissions of coal-fired electric plants, and
transportation in major cities; industrial, municipal, and agricultural pollution of inland
waterways and seacoasts; deforestation; soil erosion; soil contamination from improper
application of agricultural chemicals; scattered areas of sometimes intense radioactive
contamination; groundwater contamination from toxic waste; urban solid waste
management; abandoned stocks of obsolete pesticides

http://findarticles.com/p/articles/mi_m0CWU/is_2007_Feb_6/ai_82563178

Moscow has stated that the EU Stage 3 requirements on aircraft engine noise - set to be
introduced on 1 April 2007 - could ban 80% of Russia's aircraft from European skies, as
the bulk of the airlines' fleets are made up of those aircraft being banned and there is
allegedly little money for upgrades.

http://www.aeroflot.ru/eng/company.asp?ob_no=741

Long-Haul Routes

Boeing 767 Il-96

Medium-Haul Routes

A319-100 Il-86

Airbus A320-200 А-321

Tu-154

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International Business ISU George Pan

Short-Haul Routes

Tu-134

Freight planes

DC-10-30F

2) https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html
• All detailed information regarding the country can be found in this site

Interview with Arthur Goldstein

Q: So you were born in Russia?
A: Well yes but I left when I was young. But I did went back to visit several times.
Q: So what do you think of Russia’s infrastructure based on your personal experience?
A: Well, I guess it’s only really good and reliable in big cities. Once you move out in
more rural areas, the infrastructure is quite poor.
Q: I see, do you think it is easy to do business in Russia?
A: I would have to say no, the Russia mafia has a lot of involvement and they often
demand protection money and other illegal stuff.
Q: Wow, doesn’t the government do anything?
A: There’s too much of mess. Everything is organized poorly after the collapse of USSR.

3) http://www.aeroflot.ru/eng/company.asp?ob_no=739

Company Information

 Aeroflot is Russia’s national carrier and largest airline.

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 Founded by the Russian government on 9th February, 1923, Aeroflot is among the world’s oldest airlines
and one of Russia’s most recognised brands.

 Through its hub at Sheremetyevo Airport in Moscow, Aeroflot operates 302 flights per day to 93
destinations in 47 countries in Africa, Asia, Europe and North America.

 Aeroflot is Russia’s largest air carrier; in 2006, it accounted for 51 per cent of international scheduled and
12 per cent of domestic traffic in Russia

 In 2006, Aeroflot flew more than seven million passengers, and with its subsidiaries, Aeroflot-Don
(Rostov-on-Don) and Aeroflot-Nord (Arkhangelsk), a total of nine million passengers. Its passenger load
factor ran at 70.1 per cent and its revenue load factor was 57.7 per cent.

Aeroflot air fleet consists of 88 planes. It is based in Moscow, Sheremetyevo Airport. The
company is going to build its own terminal Sheremetyvo-3 by 2007.
Summer schedule for passenger flights will be provided by 302 flights a day. For freight carriages
four air freighters DC-10-40F will be operated on regular basis.

The airline company’s fleet is permanently getting renewed and is replenished with new Russian
and foreign planes which meet international standards.

On the seven planes B767, which are carrying out long-haul flights, cocoon-like armchairs are
installed, which provide to passengers of a business class more comfortable flight are established.
Two more planes B767 will be equipped additionally by such armchairs in the near future

Interview with Narayanan Kidambi

Q: So when did first traveled with Aeroflot?
A: It was a couple of years ago on a vacation.
Q: Was the trip pleasant?
A: No, definitely not. The service was horrible, the conditions were bad, and the airplane
seemed like it was falling apart.
Q: That old huh, do you think the company needs to purchase any new planes?
A: They absolutely need to replace their current fleet as soon as possible. After that
experience, I would never ever travel with Aeroflot anymore. I’m sure many other people
would agree with me.

4) http://www.bombardier.com/index.jsp?id=3_0&lang=en&file=/en/3_0/3_0.jsp

The Bombardier* CSeries* is the only family of aircraft designed specifically, without
compromise, for the lower end of the 100- to 149-seat market. CSeries is the perfect
balance of proven methods, materials and leading-edge technology to meet the airline
needs for 2008 and beyond.

This competitive aircraft family will be built with unmatched operating economics,
optimal environmental friendliness, total life-cycle support, unparalleled passenger
appeal, superior operational flexibility and mature reliability levels at the entry into
service.

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Interview with Matthew Baruvier at 416-633-7310 for Bombardier

Q: Thank you for your time, I do appreciate you doing this.
A: No problem, how can I help you?
Q: I hear Bombardier is launching a new class of planes.
A: Yup, we’re re launching the CS Series with C110 and C130.
Q: What’s great about them?
A: Many things. They not great noise nor air polluters, they’re comfortable, able to travel
very decent range and it’s also quite fuel economic.
Q: What will be its price?
A: Around $50 million and it’ll go up from there depending on the different hardware
different companies want.
Q: How is the plane eco-friendly?
A: Well, it uses less fuel from lighter alloy, and the alloy is used to construct the fuselage
so that makes the entire plane lighter. It also emits less greenhouse gas which we all
know is very damaging to the ozone layer.
Q: Thank you Matthew, you’ve been really helpful.
A: No problem.

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