Thriving on Strategic Alliances: The Competitive Positioning of MTU in the Aircraft Engine Business

25 Pages Posted: 15 Jul 2013 Last revised: 19 Oct 2014

Date Written: June 27, 2014

Abstract

This teaching case covers MTU Aero Engines, a German aerospace company. The focus is on alliances both vertical and horizontal to highlight a unique strategic position of the firm as a first tier systems supplier to the aircraft engine OEMs. The company enjoys a strong position in a web of relations involving most OEMs. However, more and more risk-sharing contracts involving highly innovative and complex parts means that MTU must manage its risk portfolio. The company has entered other engine related services such as the maintenance-repair-overhaul (MRO) market characterized by far more players than the engine parts business. At one stage the company was sold to the leverage-buyout company KKR in the US, raising many political issues regarding the military part of the company. Although many see MTU as a company that could become the fourth independent OEM in aero engines (GE, Rolls Royce and Pratt & Whitney) others argue against such a move. The case has been used in MBA strategy classes to highlight the costs and benefits of a complex web of strategic alliances.

Keywords: Teaching case, strategy case, alliances case, case, strategic management, MTU, aero engines, KKR, GE, Rolls Royce, Pratt & Whitney, alliances, risk-sharing, business diversification, risk management

JEL Classification: L93, L62, L22

Suggested Citation

Gudmundsson, Sveinn Vidar, Thriving on Strategic Alliances: The Competitive Positioning of MTU in the Aircraft Engine Business (June 27, 2014). Available at SSRN: https://ssrn.com/abstract=2293692 or http://dx.doi.org/10.2139/ssrn.2293692

Sveinn Vidar Gudmundsson (Contact Author)

Toulouse Business School ( email )

20, bd Lascrosses
Toulouse, 31068
France

HOME PAGE: http://www.tbs-education.fr

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