Sample Research Paper On Adga Group: Analytical Report
This report offers a consultative analysis for ABC Financial in support for possible decision to invest in Adga Group, a Canadian aerospace company. A brief company overview for Adga Group is given. Next, a broader aerospace industry is provided in which major patterns and economic impact of Canadian aerospace on overall Canadian economy is discussed. The small military market challenge for Canadian aerospace industry is discussed. The industry's performance is reviewed in light of industry's military challenge. The market structure for Canadian aerospace industry is overviewed and is followed by a deeper analysis of market makeup. ABC Financial is advised to invest in Adga Group which is part of a promising aerospace industry but is advised against lobbying liability for military sales given Canadian aerospace's limited market.
The Canadian economy is a diverse one which entertains differential skill portfolios in different sectors. Of particular note is aerospace industry. Indeed, given impact of aerospace industry on and contribution to Canadian overall economy, aerospace industry can be said to be one major indicator of Canadian economy. Accordingly, a deeper examination of major companies in Canadian aerospace industry is apt to highlight potential investment opportunities. For current purposes, one major aerospace player – Adga Group – is selected for deeper insights into potential investment opportunities for ABC Financial. To better support decision-making process for potential investment opportunity in Adga Group, a well-informed consultative report is required. This is achieved by not only developing an adequate understanding of Adga Group, an industry indicator, but also by delving into aerospace industry for more further nuanced business opportunities in promising industry projected to contribute increasingly to Canadian economy.
The selection of Adga Group is justified by a broad range of factors. Fundamentally, as noted, Adga Group is an integral part of an industry, i.e. aerospace, which is a major contribution to Canadian economy (more detailed account of Adga Group under "Adga Group: Overview" and contribution to Canadian economy under "Canadian Aerospace Industry: Overview"). As well, Adga Group provides a broad range of services across aerospace industry, making investment in company a safer bid as risk is spread over a broader service portfolio. Adga Group is, moreover, an industry leader whose expertise is manifest in market performance and revenue. Not least, Adga Group enjoys historical and strong governmental relations and is part of Aerospace Industries Association of Canada, making an investment in her stocks an investment in stakeholder relations as well. Indeed, as subsequent sections will show, Adga Group represents a promising investment opportunity in a leading aerospace industry in of world's major economies. This report aims, hence, to offer an in-depth analysis in order to support decision by ABC Financial for potential investment opportunity in Adga Group.
The report is constituted of:
- Adga Group: Overview
- Canadian Aerospace Industry: Overview,
- Canadian Aerospace Industry: The Challenge
- Industry Performance,
- Market Structure: Overview,
- Market Structure: Analysis, and
A brief account is offered about history, services, areas of expertise and price-elasticity of demand for Adga Group under "Adga Group: Overview". This is followed by a broader overview of Canadian aerospace industry under " Canadian Aerospace Industry: Overview". Next, a main challenge Canadian aerospace industry faces is discussed under "Canadian Aerospace Industry: The Challenge". Market positioning and industry competitiveness are, next, briefly overviewed under "Market Structure: Overview" followed by a deeper examination under "Market Structure: Analysis". Finally, conclusion is drawn and recommendations restated.
Adga Group: Overview
As noted, Adga Group is a major, Canadian, aerospace player. Founded 167, Adga Group covers a broad range of professional and engineering services (Adga Group, n.d.a). Indeed, Adga Group is an industry leader in a diverse set of areas but, more particularly, Systems and Software Engineering, Information Technology, Technical Support, Space, Network and Infrastructure as well as Project Management and IV & V (Adga Group, n.d.b). This is, in fact, a diverse service portfolio which makes Adga Group, as noted, a comparatively safer investment opportunity.
Further, Adga Group enjoys a geographical spread in Europe and North America which – in addition to benefits of relocation and higher bargaining power in investment maneuvering between different markets – helps establish ABC Financial in old markets and gain footholds in new ones. Currently, Adga Group is headquartered in Ottawa and has international presence in Calgary, Toronto, Montréal, Halifax, Wavre (Belgium), London (United Kingdom), Leiden (The Netherlands), Darmstadt (Germany) and Frascatti (Italy) (Adga Group, n.d.a).
Canadian Aerospace Industry: Overview
As noted, aerospace industry is one which plays a major role in Canadian economy. Made up of 700 companies and responsible for employment of more than 172,000 Canadians, aerospace industry contributes $28B of GDP to Canadian economy per annum and hit a $25.1B mark in direct revenues in 2013 (Aerospace Industries Association of Canada, n.d.a). Further, aerospace industry is one which is marked by innovation: 20% of industry's activity is dedicated to R&D, R&D investment increased by close to 40% in last five years (Aerospace Industries Association of Canada, n.d.a). This is not to mention industry's advantage in manufacturing: 4% more value-added per employee, 46% more skilled labor, 28% higher wages and, not least, 1.9 times export intensity (Aerospace Industries Association of Canada, n.d.a). These factors combined make Canada a leading aerospace player among OECD and G-7 countries (Aerospace Industries Association of Canada, n.d.a ).
Interestingly, Canadian government is a major stakeholder in aerospace industry. This is manifest in a broad range of regulatory bodies (including, for example, International Civil Aviation Organization) (Government of Canada, n.d.a), a government-funded Aerospace Demonstration Program, aimed at commercialization of aerospace innovations (Government of Canada, n.d.b), Strategic Aerospace and Defense Initiative, aimed at supporting strategic innovative projects by aerospace, space, defense and security companies (Government of Canada, n.d.c), and not least a National Aircraft Certification Program, aimed at subsidizing certification costs which are only partially currently covered (Government of Canada, n.d.d).
Canada's aerospace industry falls, admittedly, under Professional, Scientific and Technical Services (NAICS 54) which are defined as services provided in establishments primarily engaged in activities in which human capital is the major input (Government of Canada, n.d.e).
Given current situation, ABC Financial's investment in Canadian aerospace industry remains a promising potential and is projected to show sustained growth over upcoming years.
Aerospace Industry: The Challenge
On a less promising note, however, Canadian aerospace industry faces a complex set of challenges. Notably, one major challenge emerges, namely smallness of Canadian defense market. Given sophistication of Canadian aerospace industry and an annual growth, Canadian aerospace industry faces a challenge of exporting advanced services and/or innovations to governments which might pose national security risks to Canada or international community (Aerospace Review, n.d.). Indeed, as Canadian market reaches a saturation point might be reached at which exportation becomes an economic mandate and not only a national security concern. This is a challenge which needs to be addressed in a more sophisticated fashion and in a more comprehensive and collaborative review of national security issues among concerned stakeholders.
As matters stand, in spite of Canadian military market comparative smallness, aerospace defense sector constitutes 25% of total Canadian defense sector and is responsible for close to 60% of overall R&D investment (Aerospace Industries Association of Canada, n.d.a). The industry's performance reflects, on another hand, military size in overall aerospace industry for 2011 particularly as is shown in below figure and which in some provinces, particularly Quebec, has shown slowdown recently (Bert, 2015).
Market Structure: Overview
Currently, Canadian aerospace industry is dominated by major players, each in respective area of expertise, as is reflected in Aerospace Industries Association of Canada (Aerospace Industries Association of Canada, n.d.b). Put differently, Canadian aerospace industry can be described as one in which monopolistic competition reigns. Indeed, Canada's broad range of industry manufacturers and service providers are differentiated by products and services. Interestingly, moreover, Canada's aerospace market is witnessing increasing competition from emerging economies, particularly China, Russia and India (Marotte, 2013).
Market Structure: Analysis
Given current makeup of Canada's aerospace market structure enjoys a major strength of being close to established partners, particularly in United States and Western Europe (Parliament of Canada, n.d.). This proximity is, in fact, one which is not only logistically advantageous for aerospace industry but integrates commerce areas, namely NAFTA and EU, and hence expands market potentials for individual companies. For military sector, which is comparatively small in Canada, by expanding in external markets Canadian companies, including Adga Group, are open to bigger markets and hence enhance marketability of products and services.
On another hand, however, current aerospace makeup, being comparatively fragmented, is set to face increasing pressures from emerging economies (Parliament of Canada, n.d.). This is a liability which aerospace industry needs address. For military sector, an increasing external competition is more likely to eat into Canadian companies' market share, which is already small.
Accordingly, military sector remains to be approached differently. Put differently, as opposed to conventional military sales market to established partners, Canadian companies – including Adga Group – can diversify military product portfolio by lobbing for more open international business partners and a review of current military products which are addressed mainly from a national security perspective.
The aerospace industry is one of notable significance for Canadian economy. The industry holds promise for ABC Financial as a potential investment opportunity. As matters stand, Canadian aerospace industry has competitive market advantages but is also liable to market restrictions in Canada, particularly in military sector. As military risks continue to change and new entrants from emerging economies compete in Canadian aerospace markets, new alliances should be formed in light of expanding military aerospace markets. As well, given Canadian government's unique support for aerospace industry, ABC would be at better advantage investing in Adga Group as government subsidies and support are valuable assets which be considered for in any future investment decision. Finally, on liability's side, ABC Financial should consider for possible lobbying hurdles as Canadian aerospace industry expands on existing market into bigger ones beyond established partner markets.
Adga Group. (n.d.a) Retrieved from http://www.adga.ca/en/about-us.html
Adga Group. (n.d.b) Retrieved from http://www.adga.ca/en/services.html
Aerospace Industries Association of Canada. (n.d.a) Retrieved from http://www.aiac.ca/canadas-aerospace-industry/industry-statistics/
Aerospace Industries Association of Canada. (n.d.b) Retrieved from http://www.aiac.ca/about/aiac-members/
Aerospace Review. (2012) Retrieved from http://aerospacereview.ca/eic/site/060.nsf/eng/h_00009.html#cn-tphp
Bert, D. (2015, February 20). Formation en aérospatiale: l'activité stagne, les embauches se maintiennent. La Presse. Retrieved from http://affaires.lapresse.ca/portfolio/formation-en-aerospatiale/201502/20/01-4845832-formation-en-aerospatiale-lactivite-stagne-les-embauches-se-maintiennent.php
Government of Canada. (n.d.a) Retrieved from http://actionplan.gc.ca/en/initiative/international-civil-aviation-organization
Government of Canada. (n.d.b) Retrieved from http://actionplan.gc.ca/en/initiative/aerospace-technology-demonstration-program
Government of Canada. (n.d.c) Retrieved from http://actionplan.gc.ca/en/initiative/strategic-aerospace-and-defence-initiative
Government of Canada. (n.d.d) Retrieved from http://actionplan.gc.ca/en/initiative/national-aircraft-certification-program
Government of Canada. (n.d.e) Retrieved from https://www.ic.gc.ca/app/scr/sbms/sbb/cis/definition.html?code=54&lang=eng
Government of Canada. (n.d.f). Figure 7: Canadian Aerospace Manufacturing Related Activity* (2011). Retrieved from https://www.ic.gc.ca/eic/site/ad-ad.nsf/eng/h_ad03964.html
Marotte, B. (2013, June 25). Emerging markets producing hungry new competitors in aerospace industry. The Globe and Mail. Retrieved from http://www.theglobeandmail.com/report-on-business/economy/canada-competes/emerging-markets-producing-hungry-new-competitors-in-aerospace-industry/article12793224/
Parliament of Canada (n.d.). Retrieved from http://www.parl.gc.ca/Content/LOP/ResearchPublications/2013-21-e.htm#a8